
Class 
Book 







Goipghffl . 



COPYRIGHT DEPOSIT 



THE NEW INDUSTRIAL DAY 



THE 
NEW INDUSTRIAL DAY 

A BOOK FOR MEN WHO EMPLOY MEN 



BY 
WILLIAM C. REDFIELD 




NEW YORK 

THE CENTURY CO. 

1912 



0° 



***< 



Copyright, 1912, by 
The Century Co. 



Published, October, 1912 



©CLA328279 



TO THOSE FRIENDS AT HAMMER, MACHINE AND 
VISE WITH WHOM IT WAS MY PRIVILEGE TO 
BE LONG ASSOCIATED, WHOSE LOYALTY HAS 
ENDURED THROUGH YEARS AND WHOSE CON- 
FIDENCE HAS ALWAYS BEEN AN INSPIRATION. 



CONTENTS 

CHAPTER PAGE 

I Wealth and Waste 3 

II The Days of the Rule of Thumb .... 18 

III "What Have We Got to Do with Abroad" . 41 

IV Costs and Their Causes 81 

V Costs and Their Causes (Continued) . . . 105 

VI Half Way on the Industrial Road . . . .133 

VII The Rise in Human Values 153 

VIII The Scientific Spirit in Management . . .173 

IX "The New Industrial Day" 193 



To Winthrop Talbot, M.D., Editor of Human Engineering 
the writer is indebted for helpful suggestions. 



FOREWORD 

It is in the hope that we may come to see more 
clearly the right values among us, and that see- 
ing them, we may come to use them better, and 
that using them better, we may conserve them, 
that this book is written. If it shall help to 
add to the appreciation of man for man, if it 
shall aid to take away the unnecessary burdens 
placed by man on man, if it shall in any degree 
lead to the happier and more productive working 
of man with man, its purpose will have been 
fully served. 



IX 



THE NEW INDUSTRIAL DAY 



THE NEW INDUSTRIAL DAY 



CHAPTER I 
WEALTH AND WASTE 

A MEEICA must have seemed a land of almost 
*"* incredible plenty to the early Colonial set- 
tlers. Coming as they did from well populated 
countries of limited area which had often felt the 
blasting breath of war and which had long been 
fully cultivated so far as the agricultural knowl- 
edge of that day permitted, they were for the first 
time face to face with large abundance. The 
land stretched out on every side challenging 
their capacity to occupy it and with the forest 
promised materials for every common need. 
Behind them, they saw in the old world restric- 
tions on every side ; before them, they looked into 
the mysteries of a new world in which the pros- 
pect was limitless. By reaching out their hands 
they won from the scanty population of their 
adopted country whatever they wished in area 
and in these broad acres they found resources 
lavish beyond their dreams. 

3 



THE NEW INDUSTRIAL DAY 

And necessity was upon them to use this op- 
portunity to the full. Insistent demands for 
food, for clothing, for shelter allowed them no 
rest until they had taken freely of the goodly 
heritage that had fallen to them. This they did 
amid a plenty that was strange and with a large- 
ness of opportunity that was inspiring. Where 
there was so much to be had there was small need, 
indeed small opportunity for saving, for the strife 
with the land and the forest and the Indian foe 
was long, fierce and unrelenting. The problems 
of winning their way were more than sufficient 
to fill their thought. Why should they think of 
waste or saving when there was at hand more 
than could possibly be used? 

Under such conditions began the growth of 
civilization on this continent and under like 
conditions it long continued to expand. As the 
demands of the people grew they were met with 
supplies apparently as free as the air. The 
thought that there might ever come a time when 
the resources of nature would need careful hus- 
banding probably never occurred to them at all. 
As with the conquest of the land the waves 
of population surged westward and the coun- 
try became more fully known this outlook 

4 



WEALTH AND WASTE 

of abundance grew; as the prairies of the 
central west were brought under the plow; as 
the stores of coal and iron were developed; as 
later the riches in petroleum and in gold and 
silver became known, these all in their turn added 
to the inherited feeling that this was a country of 
plenty whose wealth was to be used with a 
freedom as generous as the enormous extent 
of the country itself. Indeed, the very variety 
of the riches provided by nature stimulated their 
lavish development. The abounding life of the 
expanding young nation eagerly sought and spent 
the bounty which nature gave, and out of thisi 
vast abundance and its free use by a growing 
people has come that rapid advance in the mate- 
rial side of our national life which has made 
our progress the wonder of the past century. 

It is a magnificent epic, this story of the ma- 
terial conquest of America, as full of heroic fig- 
ures, of fierce combats, of movements of mighty 
forces as any Iliad, as pregnant with promise for 
the future as was the Roman poet's legend in the 
^Eneid. After almost three centuries of ceaseless 
struggle, ending in a material victory beyond the 
dreams of the avarice of old, now comes the need 
to take sober thought of what is and is to be. 

5 



THE NEW INDUSTKIAL DAY 

For the three centuries of material conquest and 
of rapid rise in power have had two unexpected 
results. They have seriously modified the char- 
acter of our people and they have made plain to 
us that the resources of our land have their lim- 
its. 

At the very time when we have developed a na- 
tional habit of wastefulness, we have come also 
to realize with something of a shock that our 
natural wealth no longer permits continued 
wasteful use. It is but a few years since men 
thought of America almost as the fabled El Do- 
rado, and now we talk of conservation of our re- 
sources and face the problems of child labor and 
the sweat shops and the evils arising from con- 
gested population. Cry for a living and suffi- 
cient wage is heard among us and the protest 
against working hours that exhaust. 

There are not lacking examples of the waste- 
fulness with which we have dissipated our in- 
heritance. The bison which roamed in countless 
thousands over our western plains were a great 
national asset which, used with care, would have 
provided food and other valuable products which 
we now greatly need. The buffalo was wasted-^ 
killed with a reckless hand till he almost ceased 



WEALTH AND WASTE 

to be, and now, "with painful steps and slow," 
we are trying to bring back the herds which once 
roamed innumerable over the plains. Forests 
covered the land, promising a permanence of their 
products had wise care conserved them. But 
under the pressure of immediate need and the 
sense that there would always be enough, the 
forests have gone — wasted largely by fire and by 
other preventable causes till now the States and 
the nation have stepped in to protect a water sup- 
ply which has in many places already been 
threatened through the wasteful treatment of the 
forests that guarded it, 

The waste from fire is becoming familiar to 
us all. We seem until recently to have acted on 
the theory that it is better to build and burn and 
rebuild than to build once for all, and are just 
beginning to learn how costly this process is. 
We have paid in pensions over four and a half 
billions of dollars since the Civil War ended, and 
there are those who think this vast sum a serious 
burden upon us ; but we have burned up since the 
Civil War several times that amount, and if our 
full fire loss per capita can be brought down to 
the level of that in England or Germany, we 
shall save in the next twenty years more than 

7 



THE NEW INDUSTRIAL DAY 

enough to make good all that has been paid for 
pensions in these past fifty years, and can pay 
every dollar of our national and state debts be- 
sides out of the saving thus made. 

We are wasteful of life itself. What we have 
done with the bison, with our forests and through 
our fires, we have done also with the lives of our 
people. Look back through the last forty years 
and note the deaths from railway and industrial 
accidents. Include with these the lives lost 
through needless fires. Beckon among them the 
Iroquis Theater and the Triangle fire, the Brook- 
lyn Theater and the Collinwood School House, 
and consider that most, if not all, of these deaths 
were preventable. But we need not stop here. 
No one who is well informed will question that 
about forty per cent, of the deaths in our country 
to-day are needless — are from the public stand- 
point a waste of life. They occur through 
preventable causes, and means are known and 
are available to prevent the causes from operat- 
ing. We can save the lives of some five hundred 
thousand people a year if we choose, and we are 
beginning to choose. 

Much of the waste and the loss both of natural 
resources and of life are the price we have had 

8 



WEALTH AND WASTE 

to pay for progress, and our power, our comforts, 
our efficiency, all that make up the material side 
of our national life, are the results that we have 
bought at this price. The paying of this price 
was undoubtedly largely inevitable as a part of 
the cost of the nation's growth. But now that 
we have, so to speak, found ourselves, need this 
price be longer paid? May we not have a still 
more prosperous and happy America based upon 
an energy which shall be no longer reckless in 
its expenditure of resources or life? For there 
is room all about us for the use of effort of hand 
and brain in saving of waste and in producing 
at a less fearful cost than we have hitherto paid. 
We must stop the losses from the waste of hu- 
man labor, waste from fatigue and waste 
through preventable illness and deaths. 

For whether we look with the eyes of the al- 
truist or of the economist, we shall see, if our 
vision is clear, that the greatest value in America 
lies in our men and our women. We have had 
as a nation to strive so hard, first for existence, 
then for growth and then for power; we have 
had to put so much force and thought into the 
struggle for political and industrial life ; so much 
energy has necessarily gone to developing our 



THE NEW INDUSTRIAL DAY 

material resources, and so much now goes to 
the use and spending of our wealth that we have 
too much overlooked the fact that all these to- 
gether are of little worth compared with the 
value of human life and welfare. 

If American men and women are our most val- 
uable possessions — more valuable, for example, 
than material wealth — then the getting of ma- 
terial wealth at the cost of injury to men and 
women becomes an economic mistake, a national 
injury as well as an ethical wrong. The price is 
too high to be paid. The nation cannot afford to 
waste its best for anything less valuable. If a 
great state loses its sense of right values so far 
as to permit its children to be exploited to their 
injury in mills or mines in the effort for wealth, 
or to refuse to protect its men and women from 
excessive hours of labor, then that state has be- 
come disloyal to its best self ; is wasting its finest 
values, and its action or its inaction means the 
loss of that which it should be its chief function 
and pride to preserve and which it needs more 
than ail else. Wherever the labor of children 
prevails so as to stunt or injure childhood or to 
prevent these children from developing into a 
healthy and rounded manhood or womanhood, 

10 



WEALTH AND WASTE 

then he who attacks that system as one which 
destroys our best values, is a conserver of the 
state; and he who for his personal profit would 
maintain that system, is a destroyer of our best 
and becomes a menace to the state. 

Examples do not fail in history to show us 
what befalls a nation which loses its sense of hu- 
man values. Rome in the fourth century 
seemed still to sit secure and strong upon her 
Seven Hills, ruling the world with every out- 
ward semblance of power. She had wealth and 
organization and military force and at times 
great leaders, but the greatest asset of a nation 
was lacking — she lacked men. Many slaves, 
much luxury, much money was hers, but the high 
and fine values in men and women were missing 
and she fell before the strong manhood that was 
in the Goth. 

We look with horror upon the days of human 
sacrifices to the false gods of old. We shrink 
from the bloody ceremonies of the Aztecs and the 
Druids and their like, and we have evolved so far 
that in all our latter-day religions we shed no 
blood to appease the Deity. But can it be said 
that human beings are no longer sacrificed on 
the altar of ignorance or neglect? Are the in- 

11 



THE NEW INDUSTRIAL DAY 

dustries unknown in which at least a chance of 
such a sacrifice is taken? Are there no men in 
places of power who weigh rather too carefully 
what it will cost to make things safe? Risks 
must be taken, to be sure, but how far is the risk 
taken as a matter of course, and how keen the 
effort to reduce the risks? When it means lives 
against profits, do the lives always win? 

It needs no peculiar vision to see that there is 
unrest among us. Great moral forces rise in 
tides of protest against conditions that cramp or 
cripple many of our people. The cry against 
special privilege nurtured by law is one form of 
this protest. The cry against a distorted in- 
dustrialism, seeking by the law of grasp to reach 
wealth, regardless of those whom it may crush 
or injure in its path to riches, is another form of 
this protest. The cry for shorter hours of labor 
and for the protection of the women and chil- 
dren who toil is a normal protest against the 
fatigue that destroys. The call of labor for a 
larger share in the products of industry is the 
normal response to the efforts of many masters 
in industry to get too great a share for them- 
selves. The demand for the restraint by law of 
the powers that prey, is a righteous call out of 

12 



WEALTH AND WASTE 

the sad experience of those that have been preyed 
upon. 

After three centuries of development and a 
century of industrialism, in which land and re- 
sources and people have been exploited chiefly 
with the desire and, indeed, the need of getting 
riches, we have begun to take a more accurate ac- 
count of our national values, and in this in- 
ventory comes clearly out the priceless worth 
of the great asset we have mentioned — our peo- 
ple themselves. They are the first thing and be- 
side them all else is secondary. For all of them, 
and not a few of them alone, do our nation and 
our laws and our civilization and our industries 
exist. There is no righteousness and there will 
be no peace growing out of partiality or special 
privilege. The way to crime and chaos lies 
plainly in the exploitation of our men and our 
women as if they were coal or oil. In our free 
America there is to be industrial and social free- 
dom. Out of the ferment of unrest there has al- 
ready begun to come a truer sense of human val- 
ues ; a better adjustment of law to those values ; 
a keener conscience as to the treatment of those 
values, and a conservation which shall not stop 
with saving water or wood, but will make its 

13 



THE NEW INDTTSTKIAL DAY 

greatest and most fruitful task the conserving of 
our people themselves. 

In the doing of this mighty, multiform and 
complex task, those who would conserve the best 
value in America take both an advanced and a 
progressive position, They do not hesitate to 
teach the doctrine that the people who work in 
our mills are of more value to the state than 
the product of those mills. They believe 
and fearlessly say that it is much more 
to the interest of the public that the wages 
paid in those mills shall be righteous than that 
the owners of those mills shall profit largely. 
They insist that profit at the top, arising from 
penury at the bottom, is a wrong to us all that 
shall not be endured. They do not hesitate to 
say that hours that overstrain the nerves and mus- 
cles of our people injure us all, and that a 
sufficient rest is as much a reasonable right as 
is a living wage. They condemn without re- 
serve the importation of ignorant labor, only 
to exploit it at pitiful pay in industries that 
are not efficient. By instinct they look first 
and foremost for the welfare and the uplift 
of those who need the most and possess the 
least, and their outreach is toward those who 

14 



WEALTH AND WASTE 

strive hardest in life's battle rather than toward 
those who have won that fight. Their thought is 
not first for the classes that are secure, en- 
trenched by position and wealth and power 
against those ills to which all flesh is heir, but 
rather for those who are bearing the "burden and 
heat of the day," struggling upward on the com- 
mon levels of life, hoping here in our land to find 
that which shall make life broader and sweeter 
for their children than it has been for themselves. 
The true lover of America finds fellowship with 
those who, while they have been fortunate in the 
strife of life, have not lost the "common touch" 
that distinguishes the patriots of to-day; those 
who prefer to stand, if need be, on the lower 
levels, lending a hand to lift their fellow beings 
upward, striving toward the larger and the better 
day, rather than, themselves secure, to call upon 
others to rise unaided to the heights on which 
they stand. On the one hand there is the spirit 
of companionship and mutual effort; on the 
other hand too much the spirit of condescension 
and of pride. 

But while we take this progressive ground, 
we do so with a true conservative instinct, for 
salvation lies only along the lines of progress. 

15 



THE NEW INDUSTRIAL DAY 

Things cannot stay as they are. There is work 
to be done. There are conditions to be changed. 
There are readjustments to be made. We must 
go forward or we shall fall backward, and the 
progressive spirit sees clearly that the things it 
would attack and the evils it would destroy are 
menaces to the prosperity of our industries, as 
well as injuries to the body of our people. It 
looks, as is elsewhere said, for industries which 
freed from illusive protection at the hands of 
law, shall become self-reliant and strong, and in 
so looking, it uses the eye of a friend and not 
the mask of a foe. It looks to see our people 
freed from the excessive waste of fatigue and 
from the grasping power of those who would ex- 
ploit them for profit, and in so doing knows that 
it builds up our industries and our commerce on 
the only permanent and enduring basis. It 
recognizes that every form of privilege for the 
benefit of the few involves the risk of dangerous 
reactions, but that growth on right and normal 
lines is the only progress in which there are no 
reactions. 

The modern spirit in America, progressive and 
therefore truly conservative, having a keen sense 
of true values among us, believing deeply in the 

16 



WEALTH AND WASTE 

infinite worth of all the people, has set its face to 
the task of correcting the things that here and 
now are wrong. It does not assume that it will 
be easy to do this, or that it can be done in a day 
or a year, but to the doing of the task it will ad- 
dress itself with all of courage and of patience 
that the task requires, and having put its hand 
to the plow it will not turn back. It will still 
strive for wealth but with a larger knowledge of 
that in which real wealth consists. It will strive 
to prevent waste, and especially that waste of hu- 
man effort and health and life which injures and, 
if unchecked, will destroy the best values we 



17 



CHAPTER II 

THE DAYS OF THE RULE OF THUMB 

TP we have correctly understood the causes 
*■■ which have led to the wastefulness which has 
been so marked a characteristic of our material 
development in America, we shall expect to find 
that a study of our industrial life will show that 
a like tendency to waste has existed also there. 
Any observer of our industrial growth must be 
astonished at the results of what seems less like 
a normal expansion than some almost explosive 
force by which in a few decades our industries 
have sprung from the little to the large — from 
the infant stage to that of giants. Men, who are 
not yet old, recall when this was predominantly 
an agricultural country, and the tradition yet 
remains in force among us, but to-day the prod- 
ucts of our industries are greater than those 
of any other two nations in the world, and 
as this is written new records are being made in 
output, so that neither the past nor the present 
form a safe measure of what the future shall be. 

18 



THE DAYS OF THE EULE OF THUMB 

The industries of the nation have not sprung 
within a man's lifetime from childhood to heroic 
size without showing signs of that disregard for 
details which makes waste, and that strong striv- 
ing after results which often pushes to one side 
as a minor detail the relative cost at which those 
results are bad. So, side by side with the great 
achievements of our manufacturers, we should 
normally look to find that the profits arising from 
these achievements had been won at a higher 
price of waste of all kinds than it will be longer 
possible to pay, and that the day has dawned in 
which a sober second thought must be taken and 
our methods readjusted. For our industrial 
past has truly passed not to return. We can 
grind no longer with the water that has run un- 
der the mill. Conditions are not and ought 
not to be what they have been. The day 
of rough and ready contest as with the bludgeon 
and the fist has gone in our industrial fight, 
and we must use keener and more accurate 
weapons and carry on the contest at longer range 
and with more trained antagonists than those 
with whom until recently we have had to deal. 

As yet only the men of vision — the few far 
sighted captains of industry — have grasped and 

19 



THE NEW IKDUSTEIAL DAY 

acted upon this new outlook. So splendid have 
been the results of our industrial growth, so bril- 
liant the victories of our manufacturers at home 
and abroad, so astonishing the inventive skill with 
which by special tools and new appliances we 
have reduced the cost of our production, so 
matchless has been the courage with which some 
of us have forsaken the old and taken up the new, 
that we are apt to lose sight of the fact that 
these achievements and this brilliancy and fine 
courage have been the characteristics of the few 
rather than of the many, and that most of our 
industries are still laggards in the race. 

The day of the " rule of thumb " in our fac- 
tories is not yet ended, though its sun is setting. 
Many superintendents manage to-day as they man- 
aged of yore — true offspring of the industrial 
conditions under which they grew up. There is 
fearful waste of energy, of human strength and 
thought and even of life, and waste also of time 
and of material and of attention given to rela- 
tively trivial things while more serious matters 
pass unnoticed. We have depended much here- 
tofore on mere drive, or as we call it " hustling " 
— crowding into the compressed hours of busy 
days more and more, and winning out by in- 

20 



THE DAYS OF THE EXILE OF THUMB 

tensity of effort and by dint of strenuous applica- 
tion rather than by the scientific efficiency which 
saves all waste and applies the principle of the 
least effort to produce the greatest result. 

There are still men representing the old type 
who say with pride that they have never taken 
a vacation, as if such waste of human vitality, 
such failure to restore the normal drain on 
strength, could ever be wise or credible. Some 
of us have inherited from the needs of our fathers 
a doctrine which almost says that work merely 
as work, exertion purely as exertion, effort merely 
as effort, is itself a desirable thing. There are 
many among us, too, who from habit or necessity, 
and, in part at least, as a result of training keep 
on doing well and planning well and managing 
well according to " rule of thumb " standards, 
without thinking whether there may not be some 
better, easier, more productive and less costly 
method. 

Any radical change in factory management 
must be a gradual evolution out of that which 
has preceded it. The present systems, or lack of 
systems, with their good and their bad points are 
themselves the result of long evolution. No 
drastic or radical change in them can be suddenly 

21 



THE NEW INDUSTEIAL DAY 

or even rapidly made without causing disturb- 
ance. Men have become accustomed alike to the 
strong and the weak elements in the systems 
under which they work, and they cling naturally 
to that which they have been accustomed to do. 
A factory manager is a busy man. From dawn 
to dark problems large and small press on his 
thought. Questions of policy, of principle, of 
practice, of purchase in every form crowd his 
hours. Amid these cares, often while doing his 
best, he is conscious that there are better ways, 
but having only one man's strength he cannot 
take them up, especially if he has owners above 
him who are content with anything so long as 
it pays. 

During a short talk the factory manager of 
a large Eastern plant making machine tools 
was asked : " Suppose all care for operating de- 
tails were taken off your mind and your entire 
time and thought were concentrated on searching 
criticism of your own equipment and methods, 
would not your whole time, if thus spent, he pro- 
fitably employed?'' He replied: "It would 
drive me mad; there would be so much to do." 
This was a prosperous and long established busi- 
ness in a modern shop and under what is thought 

22 



THE DAYS OF THE KITLE OF THUMB 

good management. Yet the superintendent knew 
so much improvement was possible, if his time 
and thought were wholly given to self-study, that 
he dreaded to undertake so exacting a task, neces- 
sary and profitable though he knew it to be. 

The truth was that like many another able 
manager he was dealing with a mass of current 
details arising from the necessary operation of 
his works, and his time was too full to permit him 
to give to the serious task of improvements the 
continued and severe study it required. So as 
others do, he did his best, keeping his shop mov- 
ing, making a change here and there, bettering 
conditions as time and circumstances permitted, 
but knowing always that there were better 
methods which he had not time to study 
as he desired; and the customers of his concern 
and the public and his employers paid the bill; 
and not they alone but the workmen in his shop 
bore a share of the burden for by so much as the 
equipment and the management were poorer than 
the best, the workmen were held back in their 
production and their earning powers were re- 
duced. In like manner since the product of these 
works was not made in the easiest and cheap- 
est way, the customers had to pay for it. For a 

23 



THE NEW INDUSTRIAL DAY 

similar reason, too, the concern was at a disad- 
vantage as compared with others using more 
efficient plant or methods, because it had to 
charge a price enhanced because of its higher 
costs in order to make a living profit. They did 
complain of trouble in meeting foreign competi- 
tion while admitting they could but did not im- 
prove their own methods. 

A gentleman in Cleveland, Ohio, was recently 
called to examine six plants in one industry 1 — 
all prosperous and contented with themselves. 
The result of his study was that the best of the 
six was running at 78% of a normal and possible 
efficiency, and the poorest was operating at but 
30% of a fair and reasonable standard which was 
common to all six. But they did not know this ; 
profits were good and they were happy. The 
" rule of thumb " was in full operation and so 
long as it paid, why change? They were doing 
well, along lines that seemed justified by ex- 
perience. They did not at all realize that a five 
cent piece — so to speak — was being held so 
closely to their eyes that a dollar at a distance 
was invisible. None the less they and their 
workmen and the public using their goods were 
all sufferers from the waste of time and energy 

24 



THE DAYS OF THE KTJLE OF THUMB 

and manhood under this complacent management. 

I was employed years ago by two manufactur- 
ing firms neither of whom had any cost account- 
ing system. By one it was considered quite need- 
less. The experience of the owner and the fore- 
men told them without records what they thought 
were the proper costs. In the other place an at- 
tempt to show the proprietor the actual facts 
as to what his goods cost brought down his wrath 
on my defenseless head. In both places the 
"rule of thumb" was supreme and stayed su- 
preme till in accord with normal economic laws 
both concerns wound up. 

An agent of the Tariff Board recently visited 
sixteen concerns in the knit goods industry to de- 
termine the cost of their output. None of them 
knew what it cost them to produce their goods. 
The Tariff Board man had to find it all out for 
himself because no accurate records existed in 
any of the establishments. There was no such! 
thing as a good accounting system in any of the 
sixteen factories and the ideas of the owners 
were vague and hazy on the cost of production 
and still more so on how to find it. One of them 
said the government ought to employ men to go 
about and teach them how to keep their costs. 

25 



THE NEW INDUSTRIAL DAY 

In the fall of 1911 a friend told me that the 
head of a large woolen manufacturing company 
telephoned him to come to his office ; that he had 
something unique to show him. My friend went, 
and told me the thing he was shown certainly was 
unique. The woolen manufacturer had put to- 
gether in one column all his outlay for the year 
— wages, expenses, interest, taxes, fuel, every- 
thing ; and in another column opposite he had put 
the total yards of cloth made that year. Then 
he divided the total outlay by the total yardage, 
and said to my friend : " Look at that. There is 
what my goods cost me per yard last year. Did 
you ever see anything like it? " And my friend, 
with a straight face, told him he never had. This 
mill was producing about forty different kinds 
of goods, varying in width, weight, weave and ma- 
terial. The company did not know the cost of 
each. Still less did it know the cost of each 
separate operation on all or any, nor could it 
tell from accurate records whether each depart- 
ment was running at a profit or at a loss. It 
was the " rule of thumb " again. 

Anyone who is familiar from the inside with 
many of our industries knows how far most of 
our factories are from operating under exact and 

26 



THE DAYS OF THE RULE OF THUMB 

carefully ascertained standards. And it is 
equally true that the industries in which the 
" rule of thumb " most largely prevails are often 
those most unconscious of its presence. It was 
the head of a prosperous concern that spoke with! 
great pride of his machine shop and yet that very 
day a machine in that shop was found by a keen 
critic to be working at but one eightieth of its 
possible capacity. The owners of another plant 
were justly proud of its standards but a lathe 
was found there doing but one fortieth of its 
normal duty. Nor must it be thought that these 
are isolated cases of badly managed factories 
carefully culled to make a point. On the con- 
trary the plant is widely known to almost every- 
one, and has had a long and honorable career in 
which not long since a planer was found operat- 
ing indeed but doing almost no work at all. 

But the " rule of thumb " takes various forms. 
It may mean absence of precise standards and 
careful adjustment to them in factories other- 
wise well operated, or it may mean a su- 
pine contentment with conditions that ought to 
be intolerable. Facts of this latter sort appear 
plainly in the report of the Tariff Board on Wool 
and Manufactures of Wool of December 20, 1911. 

27 



THE NEW INDTTSTKIAL DAY 

It is hard to believe that the following words 
come from a manufacturer who is running a 
modern industry — they seem rather to be a voice 
from out of the " stone age " of machine produc- 
tion,-— " The old mills for all practical running 
purposes are as good as the new. There are cer- 
tain wearing parts in a machine which, if re- 
newed from time to time, keep the machine as 
good as new. This will apply to all machinery. 
Where the mill has a good machine shop, and 
where the standard of mechanical conditions is 
high, whenever a machine is not ' right ' it will 
be stopped and made i right.' If that is main- 
tained, age is not serious." 

Those final words, " age is not serious," show a 
fine disregard for advance or progress (if there 
has been any) in that particular industry. To 
this calm and contented spirit all that twenty 
years have meant of improvement in design, 
quality or efficiency is as nought. This score of 
years have given us the automobile, the aeroplane, 
the wireless telegraph and the submarine, but the 
march of the minds of the world has gone by 
this mill owner unheard, and the acclaim for 
progress passes by him " as the idle wind " which 
he respects not. We are not surprised to learn 

28 



THE DAYS OF THE EULE OF THUMB 

that in this industry a large part of the 
machinery has been in use for twenty-five years, 
or that much of our clothing is made from the 
product of these antiquated relics of an older 
and a worse day. 

It is within a year that the proprietor of a 
large mill, in answer to my question where he 
kept his costs, said to me " in my head/' and 
went on to say that he had thought of putting in 
a modern cost-keeping system, that he supposed 
it was possible to learn what each operation in 
his large plant was costing, but that it would in- 
volve an outlay of some thousands of dollars, 
and that he had never gotten to it yet. 

One of the officers of an association comprising 
many of our largest manufacturers told me a 
short time ago that " within the last few years " 
many of the manufacturers represented in his 
association had ftegun the keeping of costs. Yet 
the most superficial knowledge of how the cost of 
goods varies in different factories making similar 
products should set men searching and studying 
their own ways. Wood pulp varies in labor cost 
from 98 cents per ton to $5.90 per ton, and the 
cost of turning 36-in. coach wheels varies fivefold 
in different railway repair shops. 

29 



THE NEW INDUSTRIAL DAT 

But the operation of the " rule of thumb " has 
not been confined to America. Illustrations of 
it can be found abroad also. Some years ago I 
took an order from a British bicycle factory for a 
lot of forgings to be made in America and sent 
to England for machining. When the details of 
the order had been taken down the buyer was 
asked what allowance for finish should be left 
upon each surface. He said 1-8 in. Thinking of 
the fine plant of special American machinery that 
the English manufacturer had installed and of 
what American custom was in the use of such 
machinery, one felt sure the man had made a mis- 
take. I said to him : " So much as that? Our 
rule is to allow 1-32 in. and in some cases as little 
as 1-64 in." The customer was annoyed. He 
said that he wished to be serious, and intimated 
that it was no use to attempt to make Yankee 
yarns go down, or words to that effect. I had 
to yield, with the result that the English manu- 
facturer not only paid for a lot of metal for which 
he had no use, but did in his own shop four times 
the amount of work that was necessary with the 
normal result of that waste upon his output. 

Yet there is no doubt that our English friend 
could have made out on the surface a good case 

30 



THE DAYS OF THE RULE OF THUMB 

for himself. Was he not in actual operation of 
a large and successful business doing just this 
very work? Had the years and study he had de- 
voted to his own trade gone for nothing? Why 
should he, running a shop in England and famil- 
iar with the best practice there, take the state- 
ment of an American salesman as to the custom 
in another country, merely because he happened 
to be using American tools for certain work? 

English manufacturers have been justly con- 
sidered ultra-conservative, but there are many 
American managers who know that the leaders 
in English industry are both active and acute 
men who no longer use the " rule of thumb/' and 
both English and American manufacturers know, 
or ought to know, that their German competitor 
is he who has best cast aside traditions 
and whose example should spur us all to 
shaking off the shackles that bind us to a past 
from which we have indeed learned much that is 
good but have also inherited that which hampers 
us. The conservative in industry, however, as 
in other things has always a case. He is the man 
who talks about dealing with facts and not with 
promises. He is always practical, not theoretical. 
He is always sure that while one or another 

31 



THE NEW INDUSTRIAL DAY 

course may be satisfactory in other places, it is 
not suited to his business. I doubt if there is any 
more wornoufc excuse than this just mentioned of 
something which has worked elsewhere not being 
suited to this or that or the other particular busi- 
ness. When other grounds fail he often falls 
back upon plain incredulity for there is a type of 
man to whom " I don't believe it " is an all-suffi- 
cient argument. 

I was speaking in Congress one day of the dif- 
ference in output between conservative English 
methods and those of some alert American manu- 
facturers. A colleague in his reply asked : " Is 
it not absurd to suppose that crossing the water 
changes a man's efficiency? " Surely, but meth- 
ods differ. On the Peninsular and Oriental 
steamer that brought me from India was a large 
manufacturer of leather goods from the city of 
Philadelphia. He related the incident that on 
one occasion two young men who were leather fin- 
ishers, we will say — I am not sure about the 
process, but it was a hand process in the manu- 
facture of leather — two young Englishmen ap- 
plied to him for employment, and he happened to 
go with them out in the mill where the work was 
done. He said he would be glad to take them on 

32 



THE DAYS OF THE RULE OF THUMB 

if they could perform the regular stint of work. 
" Well," they said, " how many is that? " 
He said, " One hundred and twenty a day." 
" No, no," they said ; " no man could do that 
and live." They had been accustomed to doing 
fifty a day in England, and that is all they could 
do, and all they thought any man could do. 

" Well," said the proprietor, " I am a practical 
leather man, and I will show you." He took his 
coat off and worked some time to illustrate, and 
when he had finished found he had been working 
at the rate of 150 a day. The two young men 
left because they were not willing to work up to 
the ordinary American standard of production. 

The illustration of what is possible in the way 
of improved methods can be multiplied from 
many sources and from different industries. Mr. 
H. L. Gantt, in his recent book, " Work, Wages 
and Profits," tells his experience in a cotton mill. 
After establishing an accurate cost system and 
training the workers in their duties, it was found 
that the average wages of the workers increased 
forty per cent. The product increased eighty per 
cent, and the labor cost per piece was but sixty 
per cent of what it had been, and there were other 
savings. 

33 



THE NEW INDUSTEIAL BAY 

I recall that at one time, when giving a good 
deal of thought to the scrap heap in our factory- 
yard, I was concerned about one particular kind 
of light scrap metal for which no ready market 
was known and which had to be sold at a very 
small price to get rid of it at all. Casting about 
to find who could enlighten us on the subject, we 
learned of a large hinge manufacturer not com- 
peting with us, who produced much more of such 
scrap than we did. Feeling sure we could learn 
from him some way of dealing with this scrap so 
as to find a market for it at a better price, we 
wrote to him and asked his method of disposing 
of it. His answer was, " We just wheel it out 
in the yard and sell it the best way we can." In 
other words, he was neglecting this by-product. 
By keeping at it as time permitted, we found a 
man who wanted this material, if we would pre- 
pare it for his use, and was willing to pay much 
more for it thus prepared than the price at which 
it had theretofore been sold. I have often won- 
dered whether my friend, the hinge maker, still 
wheels his scrap out in the back yard and sells it 
for the best he can get, and if he has ever thought 
his scrap heap worthy of sufficient study to find 
out what the best he can get is. 

34 



THE DAYS OF THE KITLE OF THUMB 

There is hope in the coming of the word " scien- 
tific," now so closely associated in much of our 
industrial literature with management, for that 
which is scientific means something done with 
accurate knowledge, and one of the great needs 
of our industrial life is this knowledge. For 
strange and incredible as it may seem, the first 
truth the so-called " efficiency engineers " pro- 
claim is that neither owners nor operators, taken 
at large, know very much about the details of 
the business in which both are engaged. All 
students of what is called " scientific manage- 
ment " agree on this and they have many ex- 
amples to prove it — some of them, to the writer's 
own knowledge, from among the industries and 
in the concerns longest established and supposed 
to be most closely managed. 

And just here the most serious trouble is found 
by those who would teach "scientific manage- 
ment," for it is agreed by them all that it is the 
owners and managers who are hardest to teach, 
who have the most to learn and who approach the 
problem with the least open minds. The Bour- 
bon is not wanting in our industries. He asks, 
" How can a man who has not carried on my 
particular business instruct me in it? " He in- 

35 



THE NEW INDUSTEIAL DAY 

sists that, while doubtless in details faults may 
be found with his management, in all essential 
elements it is sound and good. Is it not the re- 
sult of years of careful study? Has it not grown 
from small beginnings to its present size? Has 
it not been consistent with dividends and with 
the accumulation of a surplus? Is not the stock 
of his company above par and honored as the 
basis of loans in many banks? What more? 
His economics conform to the good old accepted 
standards. He will buy machinery, material 
and labor as cheaply as he can. He knows the 
law of supply and demand. He is intimately 
familiar with his mill methods; rather prides 
himself on being in advance of some of his com- 
petitors; has the best equipment that he knows, 
arranged as well as anybody knows, and operated 
as skilfully as any rival's. Surely it is not pos- 
sible that he is but in the primary stages of his 
own business education, — that is to him a laugh- 
able conclusion, although there are times when 
the great mills made for production lie long idle 
and the competitive markets are taken from 
them. 

Yet it is in the very industries where these 
ideas prevail that some of the greatest lapses in 

36 



THE DAYS OF THE KULE OF THUMB 

efficiency and much of the greatest waste is 
found; where methods are most lax and "rule 
of thumb" most widely prevails. To an out- 
sider it appears that such men would be in the 
constant practice of the keenest self-criticism — 
they have so much at risk; their money, their 
reputation, and the property of others is in their 
hands. Does it not seem normal that such men 
should turn an open mind to him who would 
teach that which they need to know? Yet but a 
few months since a friend employed to examine 
into the operation of a large mill presented his 
report to a very irate manager, for the officer on 
reading the report found that it chiefly dealt with 
him and his ways, which was not the kind of in- 
struction that was welcome, and he would have 
none of it. So his mill moves on wastefully and 
blindly because of the closed mind of its chief 
owner. Against this old condition the new 
scientific spirit in management cries out in pro- 
test. It would throw a keen light of ascertained 
facts into every dark corner of industry, and 
first of all into the manager's office. He may be 
right in his views or he may be wrong, but 
modern methods of managing say to him, " Find 
out whether you are right or wrong, abandon 

37 



THE NEW INDUSTEIAL DAY 

prejudice, tradition, custom, habit; stand, as it 
were, outside of yourself, and look at yourself 
coldly, calmly, clearly, to see whether you are 
what you think you are or not." In this, at least, 
no one will quarrel with the advocates of effi- 
ciency save those who object to this keen self- 
analysis. 

It would be to the advantage of every manu- 
facturer if he could apply to himself the words of 
an experienced and keen manager who said, " If 
I don't know why I know what I think I know, 
then I want to know," and equally applicable 
are the words of the head of a prosperous 
business in Eotterdam who keeps this phrase 
printed on a card above his desk, " Every man I 
meet is my master in some point, and in this I 
learn of him." Fortunately for American in- 
dustry there are many among us who, having 
been through that analytic process and come out 
on the hither side, recognize themselves in- 
dustrially as re-formed men • — formed anew into 
a different outlook and wider knowledge and a 
broader grasp of the things with which they 
thought they were familiar before. 

What is the conclusion of the matter? 
Methods based on guess-work or on rule-of-thumb 

38 



THE DAYS OF THE EULE OF THUMB 

— must pass away. They are not always or even 
usually coincident with success. They account 
for much if not most industrial failure. But 
where success exists in spite of them they are too 
often hugged to the breast as " our ways of do- 
ing," and their vicious nature is unstudied and 
unknown. 

Manufacturing has now become a profession 
and must be approached in the same professional 
spirit with wjiich a physician or a lawyer carries 
on his work. It is the man of open, yet balanced 
mind who will win. No methods are good merely 
because they are general in use. No equipment 
is the best possible because it is what we or 
others use. The custom of the trade may be, and 
often is, a bad custom. 

The manufacturer to-day must not only know 
but know why he knows. He must learn to dis- 
tinguish the man with vision from the visionary, 
not only to see the things which are but to deduce 
from them those things that ought and are to be. 
His final proof must no longer be, " It pays." No 
longer can a manager say to himself when he 
buys a machine, " This is an investment," and 
when he hires a man, " This is an expense." 

The industrial manager of to-day must take a 
39 



THE NEW INDUSTRIAL DAY 

different attitude toward labor from that which 
has been common in the past. The day when the 
largest output was asked for the smallest wage 
is passing, not to return, for that theory of pro- 
duction is being proved false and expensive. It 
has been coincident with such waste in other 
ways, and provocative of such expense in many 
forms, that with increasing knowledge it has 
been outgrown and is being discarded. 

The keen and careful manager of a modern 
plant will rather follow the law of the greatest 
output and the greatest wage. His thought will 
go to the reduction of his burden charges, to re- 
moving the cost for repairs, to keeping his pro- 
ducing machines moving through the largest pos- 
sible percentage of the working day, to stopping 
the production of " seconds," to providing the un- 
interrupted flow of material, to cutting out the 
waste of time and effort ; and in these productive 
ways he will find his time so profitably occupied 
that the payroll may be forgotten, save that he 
will, to the extent that he is wise, see that it is 
commensurate with the productiveness of his 
operatives. We may even hope that ere long he 
will come to say with true pride : " We pay the 
largest wages, and we have, therefore, the low- 
est labor cost." 

40 



CHAPTEE III 

" WHAT HAVE WE GOT TO DO WITH ABROAD " 

TN speaking to a fellow Member of the House 
*■ of Kepresentatives recently of what I consider 
the great commercial value of the Philippines, 
he, being one of those minded to get rid of 
those islands as quickly as possible, was kind 
enough to say to me that he preferred " prin- 
ciple rather than pelf." I wish emphatically 
to protest against the idea which prevails too 
much to-day — that the business world is 
largely a world of plunder. 

It is true that the selfishness of some has 
reflected to a degree upon us all, but for that 
reason it is more necessary to affirm, as I now 
do, that the business men of America are, with 
rare exceptions, upright and high-minded men, 
respecting the rights of others, conscious of their 
duties to their fellows, seeking prosperity 
through service rather than through selfishness, 
and with personal consciences never so active 
and with public ideals never so high as to-day. 

41 



THE NEW INDUSTEIAL DAY 

Commerce is the ally of progress and develops, 
not destroys. But it is a far more complex thing 
than it once was. Our business life touches 
now questions of public policy, questions of hu- 
man interest, matters of social uplift. Others 
claim the right to supervise our business af- 
fairs as never before, and a righteous and 
watchful public opinion requires us in some de- 
gree to be our brothers' keepers whether we will 
or will not. Commercial life is difficult enough 
without what an editor has recently called " the 
ebullitions of parochial statesmen " to add to our 
many cares. Never was sanity of public thought 
more needed than to-day. 

Many of us as children were taught that our 
isolation on this continent, separated by broad 
oceans from the older worlds, was a great bene- 
fit, and we grew up, perhaps, with the idea that 
we were sufficient unto ourselves. But as we 
have become older new facts have forced these 
provincial views to the rear and now we face 
another outlook. For years we have known 
that the farmers and the millers of the Central 
and Western States have depended largely on 
foreign markets for their living. It would 
have gone hard with Minnesota and Dakota and 

42 



"WHAT HAVE WE GOT TO DO WITH ABROAD" 

other States in the past if England had not 
needed food. But we had no sooner become ac- 
customed to the idea that we were a great food- 
exporting nation than the picture changed. 
Wheat and flour no longer reign in our export 
trade; our manufactures have taken their 
place. And not only are we exporting manu- 
factures, but the proportion of them grows. 
They form now over forty-five per cent, of our 
total exports, while foods of all kinds have sunk 
to eighteen per cent. This great change, whereby 
the output of our shops has taken the place of the 
products of our farms, has gone on so quietly 
that now we realize it almost with a shock. It 
runs counter to much that we have accepted 
hitherto. I seem to recall that there were men 
who once said we needed a high tariff wall to 
keep us from the invasion of the products of the 
pauper labor of Europe, but now all of a sudden, 
as it appears, we from the hither side have o'er- 
leapt the wall and found profitable markets be- 
yond it. 

In these markets, however, we are not alone. 
There are others beyond that wall. 

While we have been bringing our total output 
of manufactures to where they are worth twenty 

43 



THE NEW INDUSTRIAL DAY 

thousand millions yearly, a like yet different 
progress has taken place elsewhere. Germany 
in her thorough, studious way has gone scien- 
tifically to work to develop herself. Her popu- 
lation expands with great leaps ; has grown one- 
half in what seems a few years. Her soil is by 
no means virgin territory. Her natural re- 
sources, compared with our own, are not large, 
but he who grasps what Germany has done with 
the resources she has, can no longer be an enemy 
of conservation here. To intensive study of 
forest, farm, and factory at home she has 
added industrial expansion abroad; has tied 
the continents to her with steamship lines, and 
placed her banks at strategic points all round 
the globe, so that the German merchant finds the 
German ship and the German banker ready to 
aid him in buying and selling German manu- 
factures in Valparaiso or Yokohama, or almost 
wherever he may be ; and German exports of her 
manufactures have grown until they form two- 
thirds of her total exports and increase. Her 
export sales of her manufactures are greater 
than ours. They are backed by the most per- 
fect public and private organizations on earth, 
by schools in which men are trained from their 

44 



"WHAT HAVE WE GOT TO DO WITH ABROAD" 

boyhood to the patriotic and lucrative purpose 
of expanding German trade. In the application 
of training, science and organization to busi- 
ness and industrial development Germany has 
no peer. Not long since a German, interested 
in the steel' industry, said to a friend going 
there : " If you think our ability to produce 
steel cheaply in Germany depends upon the 
wages we pay, you will find when you get there 
that you are wrong. It is on the perfection of 
our organization that our industries are 
based." 

Outside the wall we have built around our- 
selves is another than Germany — namely, Eng- 
land. If, with our great resources and broad 
area, we rejoice over an export trade of manufac- 
tures of a thousand millions, being five per cent, 
of our total product of manufactures, may not the 
Englishman be justly proud that in 1909 he sent 
abroad from his contracted little island fifteen 
hundred millions in value of manufactures, or 
over seventy-eight per cent, of his total exports? 
Indeed, so recently as 1907, his foreign sales of 
manufactures were over seventeen hundred mil- 
lions, eighty per cent, of his foreign trade, and the 
best estimate available is that the United King- 

45 



THE NEW INDUSTRIAL DAY 

dom exports its manufactures in the proportion 
of one to five, being a percentage of manufactured 
exports of more than three times our own. This 
solid trade rests upon a substantial base of the 
greatest mass of free capital in the world and 
upon a banking system as free and flexible as the 
air and as universal, and upon control of shipping 
that places the products of English mills 
wherever the English seller wills them to go, 
by lines controlled in his own interests. Thus, 
briefly, I have sketched the trinity of great com- 
petitors beyond our tariff wall. There are 
others, but Great Britain, Germany, and we are 
" the big three." We must stay there or shut 
down our shops. We have gone out into the 
world because we must. The product of our 
mills, our men and our minds has grown so 
large that it has burst through territorial and 
traditional lines. Even while we have sought 
protection from others, those very others have 
become our customers. 

For many years the great expanse of our own 
land and the demands of its increasing people 
gave our factories enough to do. As time went 
on our shops waxed large and their output grew 
larger, till one day we found, some of us, that 

46 



"WHAT HAVE WE GOT TO DO WITH ABKOAD" 

we were making that which we could not sell at 
home. Looking over the edge of the wall we 
found people there who liked what we had to 
sell and were willing to pay for it. We sold it 
to them; we found that habit pleasant, and the 
habit has grown. But observe that the foreign 
market has been the normal outgrowth of a 
domestic market; that one is not antagonistic 
or abnormal to the other, but the natural 
supplement to it Just so it is abroad. Eng- 
land's great internal trade is the basis on which 
her foreign trade rests, and the export trade of 
Germany is the outcome of her great domestic 
commerce. They, indeed, approach the export 
market on a basis more like necessity than we, 
for our domestic demand is enormously greater 
than theirs, and yet there are shops in America 
that would not run full time to-day were they to 
lose their export trade. Our foreign trade is 
also a safety valve that relieves the pressure of 
over-production at home. 

So, almost without knowing it, we have be- 
come one of the three greatest factors in the 
world's commerce in manufactures, and the door 
of a golden opportunity has swung wide open. 
If, like the Senator of a few years past, one were 

47 



THE NEW INDUSTRIAL DAY 

to ask, " What have we to do with abroad? " the 
answer would be, "We have everything to 
do with abroad." Let us therefore question 
frankly, What shall we do with this oppor- 
tunity? That depends on what it means to us. 
Are times ever slack in American shops? Are 
there days when the shop superintendents more 
than catch up with the sales managers, when the 
wail of the salesman is heard in the land and 
the leaves of the order book are unfilled? Do 
there come weeks of part time and of men laid 
off, with sad homes to which to go, since there 
is no work to sustain them? Have there been 
anxious hours when costs were great because 
output could not be made sufficient in the 
market that was available to distribute the bur- 
den charge widely enough to make things pay? 
Some have known what it means to have a plant 
made for production lie idle, eating its head off. 
Sometimes it happens that there is some product 
one could cheaply make but which one's par- 
ticular market did not want. Perhaps there 
was some by-product that could be made if we 
knew where it could be sold. For these and 
similar ills the door of opportunity that lies 
open affords a remedy. Out there beyond the 

48 



"WHAT HAVE WE GOT TO DO WITH ABEOAD" 

wall are many men of many minds, some of 
whom will like what we make, or will buy what 
we would make if we could sell it, or who can use 
enough of our present product to add to the out- 
put of to-day that which shall make the whole 
cost less per unit. Suppose we all go out into 
the larger world and try as others have done. 
A thousand automobiles monthly go from this 
country abroad, and Detroit prospers. I have 
seen the products of many American cities on 
the other side of the globe. 

But when we go beyond the three-mile limit we 
shall not find all plain sailing. There are some 
troubled waters on that business sea, and our 
craft will need steering just as it does at 
home. Toy boats do not navigate those waters. 
The German and the Englishman are not easily 
beaten on their own ground, and they have 
hitherto had to help them certain of our own 
domestic ghosts. It is strange that so practical 
a people as we should be ghost worshipers, but 
we have been, and some of us still are. One 
ghost, called the " Rate of Wages," has long 
stalked about on top of the tariff wall and 
scared us with his ferocious visage. He has a 
fellow ghost called the " Cost of Production," of 

49 



THE NEW INDTTSTKIAL DAY 

which we shall have more to say in the following 
chapter. While many of us, fearful of these 
specters, have feared to cross the wall, the 
Englishman and the German have fattened and 
grown rich, somewhat at our expense. 

The United States is the youngest competitor 
of the three, so far as relates to the world's 
market. One need not go back far to find the 
time when our export trade in manufactures 
was negligible. We have not yet the enormous 
free wealth of Great Britain, we lack the scien- 
tific organization of Germany, we are without 
foreign shipping and almost without foreign 
banks. We have, however, as one great resource 
the peculiar initiative of the American, his in- 
ventiveness, that spirit which makes the progress 
in our shops so rapid that six months ago with 
many of us is ancient history, that alertness, 
that mechanical imagination which reaches many 
a result long before the German by research has 
sought it out or the Englishman has contem- 
plated a change. 

Let us go a bit deeper in our analysis. Great 
Britain must export or starve industrially. 
Therefore, the outlook of the English manufac- 
turer is a world-wide one. From his earliest 

50 



"WHAT HAVE WE GOT TO DO WITH ABROAD" 

start at industry he has thought of things abroad. 
A factory in his country whose market is wholly 
at home is relatively rare. By every instinct 
and training he is an exporter, and the great 
system that backs him up has grown out of the 
necessity of his case and the political power of 
his Empire responds to and fills the need. 

In Germany a rapidly growing population in 
a country that can not expand in area and which 
has, on the whole, limited natural resources 
must expand commercially or must commer- 
cially die. The German people alone can not 
absorb the product of the highly trained Ger- 
man mind and hand. The German has a pe- 
culiar genius for organization, and seeing his 
great competitor, Great Britain, established 
throughout the world he has by organization 
and study developed that which she lacks and 
has become a serious and a menacing competitor 
with her. The German manufacturer may, be- 
cause of the larger population of his land, find 
a larger home market than Great Britain, but 
it is true of him also, though in lesser degree 
than with his English rival, that he must export 
his product ; hence he, too, finds his outlook into 
the world's markets a normal one. 

51 



THE NEW INDUSTKIAL DAY 

Here in America the reverse is true. For a 
century or more we have been developing our in- 
dustries with a sole regard to our domestic 
needs, but of late years a change has come. 
Our industries have so grown that their output 
when run continuously at full time is greater 
than our home market will take at its best, and 
when times are dull here there is a large surplus 
of unsold goods. Out of this condition has 
grown first the wish and then the need to obtain 
foreign markets. Out of this same background 
has grown the peculiar outlook of the American 
manufacturer upon the foreign field. To him if 
is not or has not been the chief market he seeks, 
but rather an incidental one. His output has 
been meant for home consumption first and 
secondarily for sale abroad, and it is as yet only 
in exceptional cases that he has come to realize 
the great value of the foreign markets to him 
and to know that they may be as valuable a part 
of his permanent field as are his customers at 
home. 

Therefore, w^ American manufacturers enter 
the foreign campaign with certain handicaps. 
Our competitors regard the foreign markets as 
their primary work, we as our secondary work. 

52 



"WHAT HAVE WE GOT TO DO WITH ABKOAD" 

They must have them to survive. We want 
them to add to a market already large. 
They strain every nerve, commercial and gov- 
ernmental, to secure and maintain them. We 
have nothing but private initiative, the alert- 
ness of mind of our manufacturers, and our pe- 
culiar inventive genius and restless energy upon 
which to depend. Yet despite these handicaps 
we have become a mighty factor in the foreign 
field. The day when American manufacturers 
could not compete on even terms with the pro- 
ducers of Europe has largely passed, and our 
opportunities are enlarging as our outlook 
broadens. 

This brief and inadequate sketch of the broad 
conditions affecting our export trade leads 
naturally to the question how we shall add to 
that we have already won. It has been found 
that our peculiar capacity for making and using 
mechanical devices and labor-saving apparatus 
of all kinds has enabled us to make our way 
even against strong and established rivals. It 
is well known that the products of American 
factories are selling all over the world, com- 
peting in price, or quality, or design, or all of 
these elements combined, with the products of 

53 



THE NEW INDUSTRIAL DAY 

Germany and England. So true is this, so well 
do we like the taste of that we have already had 
that we cry for more. Those who have already 
fully developed the field need little information, 
but those to whom it is as yet an untried quan- 
tity may be helped by suggestions. 

What the American manufacturer needs to be- 
gin and develop in export trade may be classed 
under two heads — general requirements and spe- 
cial requirements ; or perhaps it is better to say, 
large things and little things. 

In the first place, then, much depends upon 
his own mental outlook upon the foreign field. 
Just here many an American has come to grief. 
If a foreign market be regarded as an incident or 
a flyer amid the constant pressure of a large do- 
mestic trade, to receive attention when he needs 
sales, and to be neglected at other times, then 
he would better give up thought of any serious 
export business. His rivals in Germany and 
Great Britain are on the job all the time. The 
American who competes in this haphazard way 
may through a lucky chance, or the interest of 
some export commission house, receive some or- 
ders, but if they come when domestic business is 
pressing and are treated at such times as of 

54 



"WHAT HAVE WE GOT TO DO WITH ABROAD" 

comparative unimportance, or if the details of 
the foreign order are considered unworthy of 
special notice and something other than that or- 
dered is substituted which it is thought will do 
as well, then farewell to the growth of the for- 
eign business for him. The German will be 
there searching out just what that man wants, 
and the Englishman will be offering him goods 
whose standard quality will not alter for dec- 
ades together, and no haphazard way of getting 
or treating foreign orders will long survive that 
kind of competition. An American manufac- 
turer to secure foreign trade must take it seri- 
ously, must be prepared to invest in it with a 
view to its future development, just as he does 
at home, to regard it as of equal interest in due 
proportion to its size to his home trade, to cater 
to one as he does to the other, and to treat the 
foreign trade with a patient faith in its growth 
if his goods and methods are right, because he 
should know before he starts in that it is " long- 
distance " business that can not be hurried, and 
which if it is ever to flow as a river must begin 
as a brook. 

Having determined that he will patiently and 
steadily develop a foreign trade and, so to speak, 

55 



THE NEW INDUSTRIAL DAY 

"stand the gaff" of expenditure upon ii while 
looking for future results, he must next re- 
member that the foreigner will not buy from 
him because he is an American, and that the 
foreigner may be quite right in saying that 
American designs, sizes and styles do not suit 
him. The American manufacturer must ex- 
pand his vision. Many a one of them only 
sees to the three-mile limit. He must, to succeed, 
put himself to some degree in his customer's 
place, study his wants and offer him that which 
he wants to buy, rather than that which he, the 
manufacturer, wishes to sell. Therefore, the 
American manufacturer should go, if he can, or 
send to that foreign market and acquire his 
knowledge of it at first hand. He must, indeed, 
learn a good deal through others, but these 
others will tell him what it is to their advantage 
for him to know and no more, and if confined 
to that, he will work with second-hand knowl* 
edge. He would not do that at home. He can 
not long continue to do it abroad. His Euro- 
pean competitors know just what they are doing, 
and the American must learn to do likewise. 

He will speedily find that many goods are 
offered more cheaply than he produces them, 

56 



"WHAT HAVE WE GOT TO DO WITH ABKOAD" 

and at once will be forced to decide whether he 
will lie down or stand up. In the former case 
he will conclude that the low efficiency of his 
labor or the high rate of wages he has to pay 
make it impossible for him to compete abroad, 
and that the home markets are best for him. If 
he is minded, however, to stand up he will enter 
upon a merciless course of self-criticism. He 
will believe that nothing in his own business is 
right till he has tested and proved it so. He 
will be dissatisfied with his plant, his methods 
of management, of production, of handling men, 
his costs, his overhead charges, with everything. 
He will not wait for his customers to find fault 
with him, he will do his own faultfinding, and if 
he is sincere and is not imbued with that most 
hopeless of all industrial diseases called " know- 
ing his own business," he will find every day for 
years on end something that can be bettered. 
His superintendent, who, with an indifferent 
employer, might continue the use of antiquated 
machines, will on the contrary be doing a fair 
secondhand trade in them, and when his old 
equipment has been replaced with new, he will 
still not be satisfied. Nay, he will go perhaps 
to the point where he will have machines in- 

57 



THE NEW INDUSTEIAL DAY 

vented and made for him, or will so make them 
himself in order to meet a certain need. He 
will not crowd the soul and life out of his work- 
men, but will recognize that their prosperity and 
his are bound in one, and that if his product is 
to be brought low in cost it must be by furnish- 
ing them the very best tools and equipment and 
the most favorable working conditions. Because 
only when that is done and liberal pay with con- 
tinuous employment is added to it can one get 
that self-discipline enforced which is the life of a 
high-grade modern shop. No watchfulness of 
foreman or superintendent and no pressure 
from above can take the place of the willing 
brain, added to the zealous hand of a happy, 
well-paid, well-placed, well-equipped, and con- 
tented workman. Physical or nervous over- 
strain is unprofitable in the shop or mill, as well 
as in the office. So, side by side, with a broad 
outlook into the world must go a broad out- 
look into his own shop. Such a manufac- 
turer will look closely and ceaselessly at his 
rate and quality of product, and at its sure and 
steady flow. He will watch his wastes and his 
unproductive expenses, but the last thing that 
will worry him will be the rate of wage. If his 

58 



"WHAT HAVE WE GOT TO DO WITH ABROAD" 

goods come out with few or no seconds, if his 
ratio of repairs and " returns " is small, if his 
waste of time and materials is kept to a low 
limit, if his shop is well balanced, if the spirit 
in his works is that of earnest, steady, quiet 
enthusiasm, if he is a leader to his men and 
not a tyrant over them, he will be content 
if his men earn high wages for his cost sheets 
will be right. But he must meet the organ- 
ization of the German and the strength of 
the Englishman with the keenest study of the 
quality and the rate of his own production, and 
he must never be able to say of his own wa$s, 
" I am satisfied." 

The man with this outlook within and without, 
whatever his line of product, need not fear to 
enter the world's competition and given patience 
he will be successful therein. 

These are the great things. But some little 
things are important, too. We have had too 
much in America the spirit of the title of this 
chapter, "What have we got to do with 
abroad?" and this spirit has led to a compre- 
hensive ignorance of " abroad " which has been 
a sad handicap. I hesitate to write of our lack 
of knowledge of common geography, for it is a 

59 



THE NEW INDUSTKIAL DAY 

sad and painful subject. It has its tragic- 
humorous side. One smiles when a Boston 
house writes to Manila on June eighth and again 
on June twenty-fifth, saying on the latter date 
that they have received no answer to theirs of the 
eighth, and must insist upon an immediate reply. 
It is a bit droll to have a New York house refer 
an inquiry from Panama to its agents in the 
Philippines, but both of these took place. 

I must confess to a letter from my own home 
office not long since covering a statement of a 
small account, and asking the office in 
New York to step out and collect it, said 
account being in Brazil. And I remember ask- 
ing a clerk where Jamaica was, to be told it was 
in the Pacific Ocean. If I proceed along this 5 
theme my remarks will possibly become more 
forcible than fragrant, and I will only say that 
the ignorance of the average American young 
man and woman as to the world's geography is 
vast. I have never found, and the inquiry has 
frequently been made, any school anywhere 
where they taught geography with thorough- 
ness. It is really quite important to know 
in what part of the world a would-be cus- 
tomer is. I have seen heating apparatus recom- 

60 



"WHAT HAVE WE GOT TO DO WITH ABROAD" 

mended for Java. Akin to this is the equally 
tragic lack of knowledge of foreign languages 
existing among us. This is epitomized in the 
old joke : " If the foreigner does not understand 
English, speak louder." Our own tongue is so 
good a language and we speak it so well that to 
some it almost seems discourteous for a foreigner 
not to understand it, and we are so accustomed 
to feet and inches that meters and the like are 
disagreeable. I have known American manufac- 
turers abroad to realize with something of a 
shock that intelligent merchants and manufac- 
turers could not always speak or understand 
English, and that the French and German and 
Spanish languages were really practical things 
in the countries where they prevail. It has been 
with an amused annoyance sometimes that some 
of my fellow men have had painfully to realize 
these things to be true. I remember that at the 
Paris Exposition a large Chicago house had an 
exhibit. It was near mine, and after the exposi- 
tion had been open a month or so, the case con- 
taining the goods sent by this house was so very 
much in my way, for it had stood about a fort- 
night or more in the aisle, that with my own 
man I opened it and set it up in the show case 

61 



THE NEW INDUSTKIAL DAY 

belonging to my Chicago friends. There was a 
lot of literature with it, all in English, and all 
in feet and inches and dollars and cents. I have 
more than a suspicion that the house that 
treated their goods this way have a profound 
conviction that expositions are no good. Not 
far away were the exhibits of some well-known 
manufacturers in Connecticut which they 
had put into the hands of a Paris house that had 
fifty exhibits in charge, and each of them nat- 
urally got one-fiftieth of the attention of that 
house. One day a fine-looking German came 
and looked over their case intently. He could 
speak but little English, but after a while came 
to me and made me understand that he wished 
to speak to the representative of that exhibit. 
I managed to tell him that the man came there 
once a day for a few minutes, and otherwise I 
knew him not. He went away, and ten days 
later returned with his bright, intelligent daugh- 
ter, who spoke English well. She told me her 
father had sent home to Germany for her that 
she might talk English to the representative of 
the American manufacturer, for her father 
wanted to buy some of the American tools. To 
my great regret I could not even then find the 

62 



"WHAT HAVE WE GOT TO DO WITH ABKOAD" 

representative of the American exhibitor. The 
couple departed, and the American lost an order. 

The line of least resistance with a foreign 
buyer is to offer him the goods he wants de- 
scribed in the way he understands them and in 
the measures and weights with which he is 
familiar. If a Kussian came to St. Louis to sell 
goods speaking only Eussian and with Russian 
literature, he would not get far, but more than 
one American manufacturer has tried just this 
sort of thing. The widespread and growing use 
of English throughout the commercial world has 
aided us, but ability to reach a customer in the 
language and the terms he understands, it is 
hardly necessary to say, is helpful. 

American manufacturers are charged all over 
the world with certain sins alleged to be almost 
peculiar to them — underpaid postage, bad 
packing, substitutions of goods, inattention to 
correspondence, long and unexplained delays. 
All these are in the calendar of evils, and with 
some justification. To these can be added one 
special business sin that exasperates foreign 
buyers and has made some drop American lines 
that they had taken up. I refer to what seems 
to be our ingrained habit of changing list 

63 



THE NEW INDUSTKIAL DAY 

prices and altering discounts without notice. 
A foreign buyer takes an interest in a line, 
puts it in his circulars or catalogues, spends 
money to sell it, gets it going and sends in an 
order. He then receives word that since the 
last catalogue sent him the price is changed and 
one is now pleased to quote him so and so, less 
so much. Or he receives his goods together 
with a letter stating that the order is filled some- 
what reluctantly because the price has mean- 
while advanced and future lots will carry the 
new price. Instantly all the expense the foreign 
buyer has put upon the goods is wasted. His 
customers feel that he has tricked them, and the 
American manufacturer is called very hard 
names, of which " shabby " is one of the least. 
I recall one concern, and a large one, the head 
of which personally supervised the detail of 
making up every price list, for he said those 
price lists were the heart of his business and 
they should be made with such thorough care 
that they never should be changed. They were 
not changed for fifteen years, and every buyer of 
that man's goods abroad knows that save for 
serious cause that list will not be altered. 
This is true, though in a lesser degree, of dis- 

64 



"WHAT HAVE WE GOT TO DO WITH ABROAD" 

counts. I have known houses abroad either 
angered by an increase in price in some such 
way as I have described, or almost equally an- 
noyed by having a stock of goods on hand, and 
having the manufacturer send out without no- 
tice a revised discount sheet in such manner that 
his foreign agent was obliged to sell out at a 
loss. 

Many of us make the serious mistake of group- 
ing all foreigners as unsafe people to receive 
credit and of writing rather curt letters that 
cash with order or against documents are our 
sole export terms. It is needless to say that 
there are houses in almost every large city in 
the world a debt from whom is a good asset. 
Cash against documents is preferred by many 
buyers as well as sellers, but it is a pity to lose 
valuable orders from strong houses because a 
provincial habit keeps us from doing what our 
competitors do. Do you believe in your own 
goods? Then, within reasonable limits and when 
conditions permit, why not let a sound house 
see or even try them before they are asked to 
pay? A failure to show this confidence or cour- 
age (with caution) has cost orders. 

On the subject of insufficient postage, I can 
65 



THE NEW INDUSTRIAL DAY 

only say that there are houses abroad who so fre- 
quently receive underpaid letters from America 
that they simply reject them. It is hopeless to 
correct this evil, this trifle which has cost a 
deal of money to our industries — it is hopeless, 
I say, to correct it until we give up putting the 
cheapest office boy we have at sending out the 
mail in our offices. We pay, perhaps, $20 per 
week to have letters typewritten that are dic- 
tated by a man who may get several thousands 
a year, and we often spoil the operation by 
putting a $3 a week boy to inclose and mail 
them. 

One day I saw a lot of American goods in the 
Far East all streaked with rust. The buyer 
was an American by birth and training, but he 
had given up buying those goods in the United 
States. He said that he was paying fifteen 
per cent, more for English goods, and the reason 
was that the Englishman packed his goods prop- 
erly and the American would not. He said 
" would not " because he had written the Ameri- 
can manufacturer pointing out to him that goods 
going around the Horn and crossing the Pacific 
should be wrapped in oiled paper or oilcloth to 
keep them from moisture, and asked that a con- 

66 



"WHAT HAVE WE GOT TO DO WITH ABKOAD" 

signment be so packed. To this the American 
manufacturer replied that he knew how to pack 
his goods and would send them out well cared 
for in the usual way. These were the goods I 
saw damaged by streaks of rust, and that was 
the last order that was sent. 

I saw one lot of small oil stoves that had been 
shipped from America, half of which were 
broken when they arrived. The buyer had re- 
quested special care in the packing with this 
result. That was also the last order. 

In one case a green label was not wanted be- 
cause the native people did not like that color, 
but when the order was received in America and 
the standard label was green, the manufacturer 
or his storekeeper said things about the foolish- 
ness of the natives and shipped the regular 
goods. In due time they came back with freight 
charges both ways to follow, and no orders came 
after that. 

A shipment for Santos was sent to Rio, and 
months of delay ensued and much expense com- 
plicated by the fact that the shipper kept all the 
bills of lading in his own desk. 

It would not be fair, however, to give the im- 
pression that these were average or typical cases 

67 



THE NEW INDUSTRIAL DAY 

among American manufacturers. They are far 
too numerous and they are an injury to the 
trade of those who know and do better. An 
English or German manufacturer can accept a 
cable order to go by a definite steamer on a fixed 
future day, for in Europe the railroads cooper- 
ate and will take the shipment from the interior 
to be delivered " for specific sailing." Our rail- 
roads will not receive freight on this definite 
basis, and while, doubtless, they do their best, 
this uncertainty restricts our industries. We 
lose steamers now and then and goods lie over 
sometimes a month. This does not occur 
abroad. The law will not allow our railroads 
to accept an export shipment for " specific sail- 
ing " and then pay damages if they fail to con- 
nect for fear this will be a " rebate." We ought 
to get rid of this handicap. It is expensive to 
us in the loss of orders. 

Let us now refer briefly to one greater handi- 
cap under which American manufacturers suf- 
fer. 

German and English manufacturers find at 
their coast line shipping companies eager to 
facilitate the commerce of those lands. Do we? 
All the way from Hongkong by way of India to 

68 



"WHAT HAVE WE GOT TO DO WITH ABKOAD" 

New York I saw not one American flag on a 
ship. One vessel bearing our flag had been in 
Calcutta within a year. I saw a neat merchant 
steamer carrying the flag of Sarawak, and three 
good merchant steamers carrying the flag of 
Greece, but none of ours. We have all discussed 
this theme in public heretofore as if it were a 
matter for our shipbuilders or our shipowners 
chiefly to consider, or as if our sailors were most 
in interest, but this is not so. There is no 
worker in any factory throughout our broad 
land that is not a sufferer by the absence of our 
own merchant ships, and we all are daily losers 
by it. Consider what the position of a city like 
St. Louis would be if all the railroad lines en- 
tering it and every steamboat line upon the river 
also were not only owned in Chicago, but were 
deliberately operated in the special and peculiar 
interest of Chicago and with the purpose of de- 
veloping the trade of Chicago at the expense of 
all others. How long, think you, would the 
business man of St. Louis prosper under that 
pressure? But this is virtually what we en- 
counter at our water front. Our goods there 
enter, with rare exceptions, into the hands of 
shipping lines whose chief interest it is to de- 

69 



THE NEW INDUSTRIAL DAY 

velop the commerce of their own nations. They 
are glad to get, of course, the business flowing 
from our shores, and in a degree must so far 
cater to it as not to lose it, but throughout the 
preference must be given in their connections 
and in their management to those who are our 
competitors and who are their compatriots. If 
it can be realized that all Americans, manufac- 
turers and farmers alike, who seek export trade 
are constantly handicapped by having to ship 
their goods through the hands of our commercial 
antagonists, we shall be more disposed to do 
something serious to restore our merchant ma- 
rine. We have talked subsidy and we have 
talked differential duties, and we have talked 
free ships, but in this great practical America 
no men have yet arisen commanding enough 
to say effectually on this vital theme: Get to- 
gether. Can not personal and special interest 
be put aside and the demand for something 
creative come up from every factory in our land 
so strongly that we shall all know what the 
owners and the workers in our mills are com- 
ing to know, that they are the real sufferers. 
Then this handicap upon our industries may 
cease. We have set off too long one man's 

70 



"WHAT HAVE WE GOT TO DO WITH ABROAD" 

" kicks " against the other's prejudice, and 
rather than please or offend some one we have 
all fallen into the ditch. It is time to get some- 
thing done. 

And now, let us frankly face certain other 
facts. An attitude that we are able to compete 
with foreign manufacturers on their own ground 
while unable to compete with them on our 
ground can not long be maintained. The day 
of special privilege is passing away, not to re- 
turn. The day of self-help, of standing on our 
own feet, of facing fearlessly the world in open 
competition with it is dawning. It may not 
come abruptly ; it should not so come, and it may 
come with certain painful processes in its read- 
justments. But coming it is, inevitably. And 
when it comes our readjustments need not be 
made at the expense of the workers we employ, 
nor to our loss either, if we are wise and careful. 
Already men have begun to learn that to reduce 
wages induces waste, and that such a course is 
at best a costly and crude process. 

We must learn that efficiency means three 
things that always go together and can not be 
separated : the increase in our output and its im- 
proved quality, the increase in what we pay our 

71 



THE NEW INDUSTRIAL DAY 

workers, and because of these the decrease both 
in the direct and indirect cost of what we make. 
We are the most efficient people in the world, 
yet are but beginning to be efficient. We have 
yet to learn to utilize the brains of our workers 
as we utilize their hands. The best plants an- 
ticipate and avoid waste so far as may be by 
designing, making, operating, protecting their 
machinery in accord with the laws of its being. 
When we treat our men in the same way, using 
each of them at the work he is fitted to do, train- 
ing each in mind and hand to use efficiently the 
best appliances under working conditions that 
develop his mental and physical manhood, then 
we shall save human waste and reach a quality 
and quantity of product that will free us from all 
doubts of our power to meet on equal terms the 
men of any land. So long as we look first at the 
wage rate and the past or present cost instead of 
at the product rate and the possible cost we shall 
all be cowards. He who would export must first 
be fearless, then patient. And when backed by 
fearless patience, by continued self-criticism and 
intelligent knowledge and a broad spirit, the 
most doubtful of us will come to know that 
American manufacturers are peers of any in the 

73 



"WHAT HAVE WE GOT TO DO WITH ABKOAD" 

world and able if and when they choose to meet 
them fearlessly in the commercial arena. 

There are conditions in our public affairs that 
seem to call for a word more. The day is pass- 
ing away when in this land any man or group or 
corporation can say in effect to any of their fel- 
lows, " All that you have is mine if I can get it." 
The day is passing when an employer can say to 
his men, "All you have of brain and body and 
soul is mine at the least return if I can get it." 
Profits are ceasing to be the sole and su- 
preme law; men doubt the righteousness of a 
high dividend rate from a factory that does not 
pay an average wage sufficient for a decent liv- 
ing. Men feel that there are limits to the arbi- 
trary buying of labor at the lowest cost that pov- 
erty exacts. There are those who say that for 
a manufacturer to say his costs are high because 
his labor is inefficient is to condemn himself. 
These and similar things are in the air. 

The moral horizons of commercial life are 
wider than in the days of our fathers and are still 
expanding. 

Together with this is the cry against the great 
combinations arising from popular wrath at 
profits thought to be unrighteously exacted or 

73 



THE NEW INDUSTKIAL DAY 

at the unjust destroying of small competitors. 
Yet we must have large masses of capital in our 
industries and under strong control, for to pro- 
duce cheaply we must produce largely. The day 
of small production has gone, too. But such 
large grouping of capital must no longer be upon 
the old basis, but on a new one, which seeks the 
efficiency of the worker without overstraining 
him and while rewarding him well. There must 
come a new spirit which looks more at the man 
and less at the pay roll, which conserves the man 
as one of its primary thoughts, which does not 
regard a shut-down as a reasonable way of han- 
dling a great plant that was meant for produc- 
tion. There must be change in our philosophy of 
labor. We must learn the difference between 
cheapness and economy. We may think well to 
crowd our machinery to its limit and scrap it in 
a few years because a new invention shall have 
then replaced it ; but we must learn not to crowd 
men that way, for we can not scrap men. The 
man can grow, the machine can not, and we must 
be sufficiently scientific in our management to 
avail ourselves of the growth of the man. We 
must deal with inefficient labor by teaching it 
and by paying it enough to stimulate it into 
efficiency. We must not handle workmen as 

74 



"WHAT HAVE WE GOT TO DO WITH ABKOAD" 

overseers would drive slaves, but as leaders 
would lead men. 

These things must come, and in the places 
where they have arrived there is more to-day of 
industrial peace and plenty and profit than in 
the darker corners of our factories. We must 
find a way to combine the living a«nd expanding 
wage with the massing of capital and the grow- 
ing of product, so that the human forces shall 
work together. Too much of our criticism is 
merely tearing down. Let us begin to build, 
and one of the first steps in this rebuilding, 
for it is no less, of our industrial structure 
will be to ask ourselves sincerely the question 
heretofore suggested, " Where are we wrong? " 
and to answer that question fearlessly, even 
though it may require our putting aside the 
prejudice and the practice of the past. When 
this shall be done, our exports, which, large as 
they are, are perhaps less than five per cent, of 
our total commerce, will so expand that, since the 
markets of the world are steadier than the 
markets of any one country can be, our factories 
will run full time, filled with well paid and 
earnest workers to the profit of their owners and 
to the public weal. 

Our domestic business needs to feel the throb- 
75 



THE NEW INDUSTRIAL DAY 

bing pulse of the larger world of foreign com- 
merce. " One must be done, the other not left 
undone." Stability in home markets depends 
largely on ability in foreign ones. But the 
larger life is not entered, the door of opportu- 
nity is not passed by " standing pat " any more 
than it is by joining a club or an export associa- 
tion, good as these are. Fighters in the world's 
arena must lay aside every weight and the habits 
of thought and traditions that so easily beset 
them, and with keen self-training address them- 
selves to the contest. The world is said to grow 
through its discontent and our trade will grow 
on our own self-discontent with every present 
standard and method. The place for narrow 
men is in ruts ; for dead men in graves. The big 
world calls for big men, large in outlook, broad 
in view, keen enough to see that economy 
lies not so much in saving as in wise expendi- 
ture. 

Industrial education has here in America made 
great strides during recent years, but there are 
two kinds of industrial education — that of the 
hand and brain within the shop; that of the 
heart and brain within the office. I plead for 
both, for these two are one. One need not speak 

76 



"WHAT HAVE WE GOT TO DO WITH ABKOAD" 

for any method of management. These are 
many, of varied and different merit. But for 
one great, broad, generous, and efficient spirit of 
management I may fairly plead. One that shall 
be intolerant of waste of all kinds and to which 
neglect shall be a sin. One that shall set high 
standards of efficiency but equally high ones of 
sympathy. One that shall be large enough to see 
that with proper equipment and wise direction 
the well-paid man is the cheapest producer. 
One that shall slay the spirit of gaining through 
gouge and shall bring to life the spirit of suc- 
cess through service. 

Let us reduce it to details in a series of busi- 
ness proverbs for the manufacturer. 

Never give up self-study. There will always be something 
to learn about your ways. " The goblins will get you if you 
don't watch out." 

Don't let your initiative become sterilized by a tariff or 
anything else. (This may be as a friend says it is — 
" grossly inferential," but it is true nevertheless.) 

It is not wise to destroy the initiative of your working 
force by looking so hard at a quarter yourself that you 
can't see the five-dollar bill beyond. 

A justly discontented force can cost you more directly and 
indirectly than the most expert and costly supervision can 
ever find out. 

The cheapest and best discipline is that which well-paid, 
hopeful, and zealous workmen naturally create. 

77 



THE NEW INDUSTRIAL DAY 

The cutting of piecework rates and wages is the hall-mark 
of inefficient management. 

Obsolete machinery is the foe of profits, the brother of high 
cost, and the friend of bad methods. 

A Bourbon superintendent who can't learn is as bad and 
no worse than a Bourbon employer who won't learn. 

Export trade begins at home, in your own shop, and first 
with the head of it. To get it bring your wages and output 
up — your costs and prices down ; know what is doing in your 
own plant and you can smile at a competing world. 

When you have good stuff to sell, well and cheaply made, 
properly designed, and of regular quality, well packed, you 
will have no trouble to sell it abroad. What one country or 
market won't take another will. It 's a large world. Export 
trade is not " easy work," but it is a necessary filler. 
Our shops are built to run, and the money of Argentina will 
buy bread and cheese in the United States. 

When things are dull at home, why shut down 
and cut off earnings at the root? A large mar- 
ket is better than a little one. The balanced de- 
mand of all the earth is steadier than the needs 
of any one country, however large. There is 
room in many lands to do what is not now done 
at all, or to do better what is now ill done. 

Finally, we have not sought to deal with de- 
tails but with essentials, and the most essential 
thing in our shop is, or ought to be, ourselves. 
Therefore we have spoken plainly of our own 
need for self-help — the same thing in our in- 
dustrial life that we teach our children in our 

78 



"WHAT HAVE WE GOT TO DO WITH ABROAD" 

private lives. Let us therefore lay down certain 
laws for ourselves: 

A thing is not right because we do it. 

A method is not good because we use it. 

Equipment is not the best because we own it. 

The wisest of us has much to learn. 

None of us can afford to be deceived about our own affairs. 

It is better by self-criticism to find and correct our own 
faults than to have our customers do it for us. 

It is a sound law of the business world — "To thine own 
self be true, and it must follow, as the night the day, thou 
canst not then be false to any man." 

To get by the law of gouge and grasp is not 
true commerce. Against that law our enlight- 
ened business sense protests, and with equal 
force it protests against the wicked assumption 
that our business men are in any large part un- 
der the control of the law of gouge and grasp. 

Commerce is service, the friend of the worker, 
the servant of the consumer. I venture a protest 
against the spirit of attack that far too much 
prevails. Criticism should be a sober process. 
This is not found in that tyrannous type of 
mind that involves those who disagree with 
it in torrents of abuse. All are not wicked 
at whom mud is thrown, and righteousness 
is not advanced by evil means. We Ameri- 

79 



THE NEW INDUSTEIAL DAY 

cans believe in progress; it is a law of busi- 
ness to do so. But we believe also in moder- 
ation and base our hopes for the future on mod- 
erate progressiveness and on progressive mod- 
eration, in public as well as in business affairs. 



80 



I 



CHAPTER IV 

COSTS AND THEIR CAUSES 

N the Republican Platform of 1908 appeared 
the following words: 



"In all tariff legislation the true principle of protection 
is best maintained by the imposition of such duties as will 
equal the difference between the cost of production at home 
and abroad, together with a reasonable profit to American 
industries." 

It is a great pity that those words were 
printed only in the English language. It is a 
pity they were not translated into Japanese, that 
they might adorn the cabs of the seven hundred 
and twenty American locomotives on the Japa- 
nese railways for the benefit of the Japa- 
nese engine drivers ; nor translated into Chinese, 
that those in Manchuria who wear American cot- 
tons might know how self-sacrificing the makers 
were in selling them to them. It is a pity they 
were not translated into Javanese, that the ma- 
chinery America has sent to the Dutch East 
Indies might tell to the Malays there how benef- 

81 



THE NEW INDUSTRIAL DAY 

icent we have been to them. It is a pity they 
were not translated into Hindu, that the stokers 
of the Calcutta electric-light works might know 
how generous was the American firm that sold 
them their apparatus. 

It is a pity they are not printed in Dutch or 
German, that customers in Rotterdam and Ber- 
lin might know our generosity. It is a sad thing 
that those words should not be sent widely 
abroad, that the unselfishness of our American 
manufacturers to those outside of our own coun- 
try might be made more clear than it now is; 
because those men abroad have an idea that the 
American manufacturers sell them goods because 
they can afford to do so, and until I saw the lan- 
guage of this platform I had myself always sup- 
posed it was quite possible to sell to foreign 
countries at a reasonable profit. 

But since the difference in the cost of produc- 
tion is said to be such that we need protection 
against the manufacturers abroad, let us look 
more closely at those words. 

Speaking from a manufacturer's standpoint, 
I venture to think it can be shown that this state- 
ment of the Republican platform of 1908 has 
these definite characteristics : 

82 



COSTS AND THEIR CAUSES 

First. It involves certain contradictions, well 
known to manufacturers, which destroy its force. 

Second. It assumes the existence of facts that 
either do not exist or whose existence can not be 
accurately ascertained or clearly defined. 

Third. It may involve, if taken to be true as 
it reads, such discrimination against some Amer- 
ican manufacturers and in favor of some foreign 
manufacturers as is certainly unjust and would, 
I believe, be conceded to be improper even by its 
authors. 

Fourth. It ignores the nature of cost and the 
nature of competition, and, taken at its face, 
calls for the removal of the duties on many 
American manufactures. 

Fifth. . It has worked grave injustice to our 
poor people and disaster to many American 
manufacturers. 

These things I believe at the end of twenty- 
five years' manufacturing experience. I have 
followed attentively our recent tariff discussions, 
and certain facts in them or the absence of cer- 
tain facts, have forced themselves upon me. 
Some of the fundamental things with which 
all manufacturers are familiar have not been 
mentioned. I have not heard a word in our Con- 

83 



THE NEW IKDUSTKIAL DAY 

gress of many of those things about which I 
should tell a costkeeper to be watchful. 

I have not heard it mentioned that there are 
many elements of cost, not one or two or three, 
but many and complex elements. And, there- 
fore, because I have found it possible, and be- 
cause we all know hundreds of American manu- 
facturers have found it possible, to compete in 
the markets of the world, it is for that reason 
that I venture to consider at length this im- 
portant question. 

How does it happen, that in a quotation re- 
cently made for machinery to a mine in Japan 
the American price was $215 less than the Eng- 
lish price? How does it happen that American 
locomotives are running upon the Japanese rail- 
ways, upon those of Formosa, upon those of Man- 
churia and Brazil? These are sold in compe- 
tition with makers in Great Britain. I know 
what those locomotives cost, relative to those 
made by German and English manufacturers; 
and I happen also to know this, which is one of 
several stories which will illustrate this particu- 
lar contention — namely, that last year I was in 
the city of Tokyo, and a friend who was with me 
took a large contract from the Japanese Imperial 

84 



COSTS AND THEIR CAUSES 

State Railways, in open competition with Ger- 
many and England, for several million dollars' 
worth of locomotives. That gentleman went to 
the locomotive shops of the Imperial Railways, 
and the Japanese master mechanic said to him: 
"We can make locomotives much cheaper than 
you can in America." 

" Can you? " inquired my friend. " If so, let 
us get at the facts. If you will tell me from 
your cost sheets what your locomotives cost, 
I will tell you what ours cost." And, by the 
way, he said: "What makes you think your 
locomotives cost less than ours? " 

"Why," the Japanese replied, "because we 
pay only one-fifth the wages to our men that you 
pay to yours." 

So they got the cost books, and discovered that 
the labor cost for locomotives on the same speci- 
fications was three and one-half times greater in 
the Japanese shop than in the American shops. 
That is a perfectly normal fact and not an ab- 
normal one. 

I went to the city of Birmingham one day. If 
it was impossible to sell there the goods I went 
to sell, I was either ignorant or foolish. How- 
ever, I went. An English competitor there, be- 

85 



THE NEW INDUSTRIAL DAY 

ing very busy on other work, said to me, " Will 
you take a contract to manufacture a standard 
line of my goods in quantities and turn them 
over, delivered in Manchester, so that I can 
make ten per cent, profit upon them?" 

I said, " Certainly." I should have been de- 
lighted to have the order. He then put it up to 
his board of directors, but unfortunately for me, 
their British pride forbade them to give me the 
contract. 

To illustrate another phase of this question: 
The city of Liege, in Belgium, has about the low- 
est priced industrial labor in Europe. It is of 
course absurd that American manufacturers 
should attempt to sell goods in Liege, but still 
they do. I spent the day with a large buyer 
there, and all the morning we discussed prices, 
which were satisfactory, and quality, which was 
satisfactory; and I went back in the afternoon 
fully expecting to get an order. But the old gen- 
tleman then told me the duty on his goods had 
been raised — for he sold largely in the Amer- 
ican market — and he said to me : " Your goods 
are satisfactory and the prices are right, but I 
will not give you an order, because you shall not 
come to me with one hand saying ' Thou shalt 



COSTS AND THEIE CAUSES 

not enter,' and with the other hand i Give me 
your business.' " 

A few more illustrations may be interesting: 
My agent in the city of Calcutta one day called 
my attention to the shoes he was wearing. He 
said, " I paid $3.85 for these shoes." 

"Why," I said, "that is an American shoe." 

" Yes," he said, " I bought it here. It is the 
regular American $5 shoe." 

I said, " Are you sure? " 

He said, " Yes. I wore them to New York 
and went into the store on Broadway where they 
are sold and asked what the price was there, and 
I was told it was their regular $5 shoe." 

I treasure, as a souvenir, a small, ordinary 
pencil. It has upon it the name of the American 
Lead Pencil Co., of New York. I bought it out 
of stock in the small town of Bandoeng in Cen- 
tral Java. I have in my home some men's toilet 
articles — shaving soap, and so forth, made in 
New Jersey. I bought them in Hongkong. I 
found such goods in stock in drug stores around 
the planet. 

On a main street of the city of Batavia is a 
good business building. It is one of the most 
creditable buildings in Java, and over the door 

87 



THE NEW INDUSTRIAL DAY ' 

are these words, " United States Steel Products 
Co." 

Yet we are told that though foreign manu- 
facturers are handicapped by distance, by time, 
and by freight, we can not compete with them 
at home because we pay high wages and they 
pay low wages. 

To end for the time these illustrations, let me 
give a list taken at random from one export jour- 
nal stating the American goods that they are of- 
fering abroad, for sale in open competition with 
Germany and Great Britain : " Ironmongery, 
fine tools, bicycles, sporting goods, lamps, razors, 
firearms, carriage makers' supplies, sanitary 
goods, lighting systems, dry goods, men's furnish- 
ing goods, boots and shoes, corsets, hats and caps, 
textiles, clothing, women's furnishings, office fur- 
niture, office devices, stationery, typewriters, fil- 
ing cabinets, printers' supplies, paper, machine 
tools, boilers, lubricants, electrical material, 
valves, wood-working machinery, belting, shaft- 
ing, pulleys, packing, furniture, kitchenware and 
agricultural implements." By that mention of 
agricultural machinery one is reminded of the 
significant fact that there are manufacturing 
houses in America that sell almost no goods in the 

88 



COSTS AND THEIK CAUSES 

United States. They pay as high wages as any- 
one. There is one in Poughkeepsie N. Y., mak- 
ing agricultural machinery ; another is near New- 
burgh, N. Y.; one is in New York City. There 
are many more. 

It is often assumed, without argument, that 
American manufacturers can not compete in the 
world's market on even terms without protection, 
and can not even hold their own at home. The 
only suggested way of meeting competition is by 
reducing wages, the crudest, the coarsest, and the 
most brutal of all methods. 

The only form of competition that appears to 
be known is in the prices at which goods are sold, 
and yet some American goods selling widely 
abroad bring higher prices in Europe and other 
foreign markets than goods produced of the same 
kind in the markets where they are sold. 

The necessity therefore exists for a broader 
view of this whole subject which shall take into 
account facts that have not yet appeared, which 
shall consider it from a practical rather than 
from a theoretical side. 

Let us look at the cost of production from the 
manufacturers' standpoint. What is it and what 
does it involve and how shall it be handled? 

89 



THE NEW INDUSTRIAL DAY 

There are four groups that enter into every 
factory cost : 

1. The cost of labor. 

2. The cost of material. 

3. Burden cost (or overhead charges). 
4; Selling cost. 

The aggregate of these four fixes the point per 
unit of product where profit begins. Let us dis- 
cuss them separately. 

First, labor cost. In a modern industry this 
is often not the largest element in cost per unit 
of their product. In some industries it is rarely 
the largest element in unit cost. In my own ex- 
perience there have been many cases where, had 
the labor cost equaled the other elements of cost 
per unit, I should have thought the superintend- 
ent needed overhauling. It is a matter of testi- 
mony that in an American locomotive the per- 
centage of direct labor cost is eighteen and that 
the percentage of material cost and of burden and 
overhead charges is eighty-two. 

It needs only the statement to show that the 
important factor in labor cost is not the rate of 
wage, but the rate of output. It is not what you 
pay, but what you get for what you pay that 
counts. 

90 



COSTS AND THEIE CAUSES 

Once, when my office was located in Paris, I 
employed a lot of French carpenters and paid 
them ten francs a day — $1.90 each — and at the 
end of three or four days I was well-nigh crazy. 
Down the long aisle of the building I saw a fa- 
miliar-looking tool box, with a saw sticking from 
the end, and I ran to the place and found a man 
who looked like an American carpenter. 

" Are you a Yankee? " I said, " I want to em- 
ploy you at once." 

He said, " Boss, I charge $4.50 a day." 

I said, " Come right along." 

Two days later I discharged four Frenchmen, 
for my one American carpenter did more work 
than the four Frenchmen — and I saved money 
by the process. 

There are sound reasons why the American 
carpenter did as much work as four Frenchmen. 

A French workman goes to work having eaten 
almost nothing. For breakfast he has nothing 
more than a bit of bread, without butter, and 
coffee. At eleven o'clock he stops to eat a 
little bread and drink a little sour wine. That 
is all I ever saw any of them eat. At three 
o'clock he stops again to eat a little bread 
and drink a little sour wine. After he gets 

91 



THE NEW INDUSTEIAL DAY 

through at night he has what he calls a dinner. 
Such a man can not work at any labor requiring 
steady physical exertion continuously under pres- 
sure, in competition with a man who eats three 
square meals a day. 

Once, an Englishman asked me to go into his 
works and suggest how to cut down his labor 
cost. What I found at that particular time in 
that English factory was this: a screw machine 
was making bolts of various sizes, and a boy was 
running it at a very small wage, probably about 
two shillings a day. 

I stood looking at the boy and his product; 
first, twenty half-inch bolts, and then twenty-five 
one-eighth-inch bolts, and then fifty three-quar- 
ter-inch bolts, and then five or six one-inch bolts, 
and then back to quarter-inch. I went to the 
superintendent and said to him, " That boy is 
costing you more than a man who earns $3 a day 
would in one of our shops. His time is used in 
altering tools. He is ' breaking up,' as we say, 
altering his machine from time to time and 
stopping his processes ten to fifteen times a 
day." 

He said, " What would you do? " 

I said, " Give him one size and let him run 
92 



COSTS AND THEIE CAUSES 

all day on that. The next morning give him an- 
other size and let him run all day on that, and 
the next morning give him another size; do not 
stop your machines, but run them steadily on one 
size." 

" Why," he said, " we can not get foremen to 
think that out." 

As has just been stated in the matter of labor 
cost the serious element is not the rate of wage, 
but the rate of output. One of the things that 
should be burned into the reader's thought is 
this — the essentially variable quality of cost. It 
cannot be talked about as a fixed thing. Cost is 
everywhere and always variable — at every time 
and in every place. 

Output varies with the character of the work- 
men, the equipment, its arrangement, or other 
local conditions, with the nature of the superin- 
tendence, with the discipline, and so forth. It is 
absurd to assume that work done by a man paid 
$4 daily costs more per unit than work done by 
a man paid $2 daily. It may be more or less 
costly, and depends upon other conditions. 
Therefore, because certain goods are produced 
at a certain labor cost per unit when the wage 
rate is $3 per day in a certain place, it can never 

93 



THE NEW INDUSTRIAL DAY 

be argued that the same wage rate on similar 
goods results in a like labor cost per unit in an- 
other place. It may vary from ten to fifty per 
cent. To discuss the wage rate as the control- 
ling factor in labor cost per unit is both inade- 
quate and misleading. The railroads are a not- 
able example of this. The English railways have 
vastly cheaper labor than we, but their freight 
charge per ton-mile is two and one-half times 
ours. With pride the Indian railway depart- 
ment told this last winter that, though their la- 
bor is one-eighth of ours in cost per day, they 
had succeeded in getting down to a trifle lower 
freight cost per ton-mile than we. They had 
been years at it, with a labor rate one-eighth of 
ours, and had just succeeded. 

I have recently received a letter from the rep- 
resentative of my business in Rangoon, saying, 
" Figure on an apparatus using native labor 
cheap but bad." To say a man gets $3 per day 
means nothing at all as to the cost of his prod- 
uct. It may be either low or high, and the wage 
rate taken by itself alone affords no basis of 
comparison. Apart from the wage rate, labor 
cost per unit is very largely under the control 
of the manufacturer and may be radically al- 

94 



COSTS AND THEIE CAUSES 

tered without changing the wage rate at all. 

This question as to a manufacturer's control 
of his labor cost apart from the wage rate may 
be illustrated by examples. 

I know a factory in which the product was 
doubled in two years without adding a man or 
without adding a machine. And this is the way 
it was done: it is a very interesting experience 
in labor cost. The men had been paid on day 
work. The labor men have, and they properly 
have, a horror of piecework, as it is commonly 
administered, because, I am sorry to say, manu- 
facturers have so abused the piecework principle 
that the laboring men have justly come to fear 
it. As piecework is handled in many factories 
it ought to be hated, as it is hated, but in this 
particular factory the head of the concern had 
the idea that he could save by guaranteeing his 
men a high wage. He became convinced that he 
could save by paying a high wage, and he said to 
the workmen, "We will guarantee your day 
rates; you shall always earn your present day's 
pay. We will also guarantee that your piece- 
work rates shall not be cut. We will agree with 
one another that obvious mistakes will be cor- 
rected either way, but if you earn large pay, un- 

95 



THE NEW INDUSTRIAL DAY 

derstand, your piecework rate shall not be cut." 
That was true. That factory has operated 
upon that basis for many years. The wages of 
some men went up to $6, and in some cases even 
to f 7 a day. I had the pleasure of selling some 
of the product of this shop abroad, against Eu- 
ropean competition. 

Now, when the men were guaranteed an un- 
limited earning rate, see what happened. The 
manufacturer said, " There is the machine. 
There is your power. Go ahead. Earn all you 
can, and God bless you." Now, naturally the 
first result of that was largely to increase the 
product. Then three other things happened. 
The manufacturer went to a man and said, " Pat, 
you are earning pretty good wages. It does not 
make any difference to me what you earn. The 
more you earn the better for us both. But there 
is one thing you can not afford, and that is to 
have your machine shut down for repairs. It 
hurts me, and it hurts you every hour that that 
machine is idle, and your machine is of that par- 
ticular kind and is engaged in that particular 
work that knocks it to pieces if proper care is 
not taken. Every hour it is delayed in opera- 
tion hurts both you and me." 

96 



COSTS AND THEIR CAUSES 

Says Pat, " What is it that you want? " 

" I want you to spend about fifteen minutes 
before work starts every morning in overhauling 
that machine in your own interest. Do not let 
it get into such shape that it will need repairs." 

I can not state the exact number of thousands 
of dollars per annum that was saved in that fac- 
tory in that simple way, but it was several times 
$10,000 a year, just that item of examining care- 
fully the machines every morning before begin- 
ning regular operations. 

In the next place, the system of using fuel had 
been more or less thoughtless in this shop. The 
manufacturer went to his workmen and said to 
them, " Boys, you are not going to be cut, no 
matter what you earn. You can not afford to 
waste time in firing improperly. You must be 
careful." His men did as instructed. At the 
end of three or four weeks about an hour and a 
quarter's time was saved each day, amounting 
to one-eighth of the operating time of that part 
of the plant, besides a saving of fuel. 

In many factories the element of defective 
goods is a large element of cost. This manufac- 
turer went to his men and said, " Boys, you are 
well paid. There is no limit, practically, to 

97 



THE NEW INDUSTBIAL BAY 

what you can earn. But it is not fair on that 
basis to make any bad goods." The men 
thought the matter over among themselves, and 
finally they came to him and said " What is it 
you want? " and he said, " I want you to replace 
the bad goods in your own time and to pay for 
the material that you waste." And right there 
was saved several thousand dollars more in the 
course of a year. 

In those ways, without touching the rate of 
wage, the output of that factory was doubled in 
two years; and the same thing, to a greater or 
less degree, depending upon different circum- 
stances, is possible everywhere. But some one 
will say about the case quoted that there must 
have been lax management theretofore. That 
was not the case. Prior to these events that 
concern was successfully competing with many 
others, and held a leading place. 

I met an American leather manufacturer while 
abroad. Some English visitors came into his 
plant, and he showed them how he was making 
a hundred dozen of a certain kind of skin per 
day — that is, doing a certain operation on that 
many per day — and they said to him : " That is 
very good, indeed ; better than we do, and we are 

98 



COSTS AND THEIK CAUSES 

very much pleased with it." But he did not tell 
them that he had just bought a machine that 
did three hundred dozen a day. And when a 
few years later he went to see them in Great 
Britain and found they had risen to his standard 
of one hundred dozen a day, he did not tell them 
then that he had put in another machine that 
did six hundred dozen a day. 

Labor cost per unit varies with time and 
place, and in the same shop is constantly chang- 
ing. It is unlike in each of several mills pro- 
ducing the same goods, belonging to the same 
company. A superintendent who would take 
three mills making the same goods, under the 
same ownership, in three different cities, and 
get the cost alike would be a wonder. I have in 
mind two factories, belonging to the same con- 
cern, where for two years it has been a constant 
effort to get the costs alike in making the same 
goods. But what is to be done when in one fac- 
tory power costs three times as much as it does 
in the other? 

Labor cost is affected by sanitary and climatic 
conditions. It varies with the quantity and the 
quality of the output, and it can never be as- 
sumed that it is at the close of the year what it 

99 



THE NEW INDTJSTEIAL DAY 

was at the beginning of the year in the same 
shop. It is enormously modified by the prog- 
ress of invention. The labor cost in a shop in 
January may be in some respects entirely wiped 
out by July. The labor cost in July may be en- 
tirely altered by December; else what is the pur- 
chasing agent for, and for what purpose are the 
manufacturers feeling out all over the world 
for the latest machinery? Base a tax upon the 
January cost, that is just equal to the difference 
in foreign cost, if there be such a thing, and it 
is altogether altered by July, and by December 
it may be three times the difference. And every 
manufacturer knows these things and lives up 
to them every day, but does not always talk 
about them in public. 

Labor cost varies with the arrangement of 
machinery within the shop. It is affected by 
the space available. It varies with changes in 
material, with the sufficiency and the regularity 
of the supply of material and its suitability to 
the work. And the labor cost of Monday when 
the stock runs out Monday afternoon and new 
stock comes in Tuesday, is not the same on Tues- 
day that it was on Monday. The steel mill may 
have made an error and the labor cost go flying 

100 



COSTS AND THEIR CAUSES 

up for the time. And I write from an experi- 
ence in figuring labor costs to hundredths of a 
cent per unit. 

Labor cost is affected by the lighting and the 
power equipment of the shop, and will change 
with the going of one superintendent and the 
coming of another. These things need only be 
said one after the other to have their entire rea- 
sonableness made plain to all. 

Labor cost will alter radically within a 
month, by the introduction of new tools, new 
machinery, or the change of a process, even to 
the extent of having a whole process eliminated. 
It varies with the wastefulness of material used 
in producing an article, excessive use of sup- 
plies, the loss of time and material occasioned 
in making defective goods; and every one of 
these items has to be carefully watched by any 
alert manufacturer. 

The labor cost is affected by methods of pay- 
ing (by piecework on a righteous basis, and by 
day's work on an unrighteous basis) and by a 
just and considerate application of the methods 
of paying apart from the amount paid. 

Labor cost is, therefore, a variable element. 
It can not be measured by any fixed standard. 

101 



THE NEW INDUSTRIAL DAY 

To offer a fixed rate of duty to cover the differ- 
ence in labor cost is to state an absurdity, for 
the one is variable and the other is fixed. 

But labor cost in any factory is both direct 
and indirect, as will be made plain; upon the 
proper adjustment of one to the other depends 
in a degree the labor cost. 

Beafl&rming, therefore, that in many indus- 
tries the unit cost of labor is not the largest ele- 
ment of the total unit cost, but may be a small 
percentage thereof, we pass to consider the cost 
of material. This is the most fixed of all the 
elements of cost, but only a little thought is 
needed to show that this, too, is variable. In 
two shops, one buying in large quantities and 
the other small quantities of the same goods, the 
price of the material will vary. In two large 
shops which buy the same quantity, but have 
buyers of different skill and differing in amount 
of free capital with which to purchase, the cost 
will vary. In two shops in the same business, 
but located differently with respect to transpor- 
tation, the cost will vary. Within the shops the 
cost of material will vary with the handling fa- 
cilities provided and with the space available 
for storage. The cost of material will vary with 

102 



COSTS AND THEIE CAUSES 

the system of receiving the same and storing 
them. The cost of material must always in- 
clude such important and variable items as 
freight, cartage, wharfage, demurrage, and the 
like. 

The cost of material must always include the 
wages of the storekeeper and a share of rental 
for the space occupied by it. The cost of ma- 
terial will vary also with such depreciation as 
will take place if it is not protected against loss. 
This, therefore, though relatively a fixed quan- 
tity, is variable, so that in different shops, in the 
same line of business, it can not be argued that 
the net material cost in one even approximates 
that in another. 

The cost of material must include the factory 
supplies, the purchase, keeping, and manage- 
ment of which is an important and complex ele- 
ment of cost where thousands may easily go out 
of sight. Consider what it may mean to have 
one purchase of bad lubricating oil. Its use on 
valuable and delicate machinery may cause the 
loss of thousands of dollars in a week. 

But when the variable items of unit cost of 
labor and material are combined, what is known 
as prime cost, or actual outlay only has been ob- 

103 



THE NEW INDTTSTKIAL DAY 

tained, and two serious elements in cost, each 
of which sometimes amounts to a larger total 
than either labor or material, and sometimes ex- 
ceeds both, are still to be considered. 
These are discussed in the next chapter. 



104 



w 



CHAPTER V 
costs and their causes. (Continued) 
E take up, third, burden cost or the over- 



head charge. This is often ignored or 
not appreciated at its true value. Probably more 
concerns are wrecked by failure to estimate or 
manage it properly than by any other single 
cause save perhaps insufficient capital. 

Among the items covered in burden cost are 
such as these : taxes and assessments, repairs to 
buildings and machinery, indirect labor, super- 
intendence, experiments, insurance and fire pro- 
tection (two different things), depreciation, bad 
debts, accidents, interest and discounts, power, 
heat, and light, and legal expenses — every one 
of them matters needing the most careful atten- 
tion, if they are to be kept within reasonable 
limits. 

A large concern located on expensive land in 
a city with high rates of assessment and taxes 
may bear a burden in this single respect enough 
to pay a profit on the entire investment of a 

105 



THE NEW INDUSTRIAL DAY 

small concern more favorably placed; but, as 
showing the complex nature of this problem, the 
same concern may, by reason of its equipment 
and its efficient organization, produce goods, 
so cheaply as to overcome this handicap though 
paying the same or higher wages. 

Repairs vary with the character of the build- 
ings, their age, their location, with climate, and 
with respect to machinery, with the care given 
to it, and the nature of the work done by it. In 
some industries this item of repairs is very 
large. 

Indirect labor is an unfortunate necessity in 
every industry. A cotton mill employs carpen- 
ters and steam fitters, whose presence is neces- 
sary, but whose expense is a burden on the out- 
put. Every modern shop has to have a tool 
room. This question of indirect cost is often 
a very serious one, and is a matter requiring the 
closest professional study. 

The cost of superintendence is apt to be heavy 
in proportion as the labor is cheap. I was 
much interested in a visit to the jute mills in 
Calcutta where I talked with the superintend- 
ent. It is an excellent plan, if you wish to 
get at the details of a factory, to talk with 

106 



COSTS AND THEIK CAUSES CONTINUED 

the practical men who operate it. I asked this 
gentleman about his labor. He said it was 
cheap, very cheap. 
I said, "Is it wasteful?" 
He answered, " Extremely wasteful." 
I asked him in what other respect it was bad, 
and he said it was bad in the respect that it re- 
quired an unusual amount of European superin- 
tendence — three to four times as much as they 
would give in Scotland. 

Experiments looking toward new or better 
output, tools, or machines are a very expensive 
item in many factories. It is hardly necessary 
to say that insurance varies. An old wooden 
mill must charge the cost of its output with 
many times the unit cost for insurance that is 
borne by goods produced in modern so-called 
slow-burning buildings. The actual loss from 
fires, over and above that covered by insurance, 
is a part of the burden cost frequently forgot- 
ten and of uncertain amount, but often serious. 
Depreciation is a large item of cost, amounting 
often to as much as ten per cent, per annum of 
the entire value of the machinery, buildings, and 
other equipment, varying with conditions. 
Sometimes neglected by manufacturers, it forms 

107 



THE NEW INDUSTRIAL DAY 

a burden of a self-enforcing character, which, if 
not reckoned as an annual addition to the bur- 
den cost, will come in a lump sum whenever ma- 
chinery or buildings must be replaced. The loss 
arising through machinery thrown out of date 
by new inventions is a serious part of burden 
cost frequently forgotten. The loss arising 
from the continued use of antiquated and slow- 
producing apparatus is another large part of 
burden cost. 

Some few years ago I visited a large English 
engineering shop, and to my horror discovered 
an old-fashioned single cylinder walking-beam 
engine being built. I asked what that was for, 
and they said it was for a cotton mill in Old- 
ham. Alongside of that they were building sev- 
eral modern triple-expansion engines. I said to 
the proprietor, "Why is that old type being 
built; it is fifty years behind the times." 

He said, " Simply because the owner said his 
father had one like it, and he wanted the same 
thing." 

This question of slow-producing apparatus is 
sometimes by itself alone very serious. There 
was one large sugar refinery in New York City 
which closed on that account alone. I recall an- 

108 



COSTS AND THEIR CAUSES CONTINUED 

other where the single item of cartage was so 
great they had to go out of business. Three 
woolen mills stood idle for years because their 
machinery was out of date and they would not 
replace it, and another was idle and stood idle 
because it was three miles from a railroad and 
the cartage killed it. Those are the things that 
make for high cost rather than the difference in 
the wage rate. The losses from accident are a 
constant terror to every manufacturer, and yet 
I stood, recently, in a factory claiming high pro- 
tection from the tariff law which could not only 
have made a profit by saving in handling charges 
alone, but which stood to lose — for lack of care 
for human flesh and blood, and because of fail- 
ure to properly protect its machinery — thou- 
sands of dollars every year. 

The loss arising from bad accounts is present 
in every business, and varies with the care in 
selling goods. 

The burden charge arising from interest and 
discounts varies with the amount of free capi- 
tal available in the business. I do not refer to 
the interest upon bonds or the interest on the 
total investment, with which some concerns 
charge themselves as an expense, but rather the 

109 



THE NEW INDUSTRIAL DAY 

interest that is to be paid upon real-estate mort- 
gages and upon money borrowed to supply work- 
ing capital and for discounts allowed customers 
for prepayment. 

Power, heat, and light vary greatly. The 
source of power is so variable that no general 
statement can be made — for example, power 
from water, from steam, from electricity, or 
from gas engines. I am interested in two con- 
cerns using electric power. One pays five cents 
per kilowatt hour, taking it from steam; the 
other one and a half cents a kilowatt hour, tak- 
ing it from water, a difference of over three hun- 
dred per cent, in the power rate. 

It will be seen that the item of burden cost is 
one of importance and difficult to define. It is 
one in which every manufacturer is very closely 
interested, because it very often affects the cost 
of his production far more than the rate of 
wages that he pays. Manufacturers, however, 
are very apt to assume the burden cost to be less 
than it is. Instead of making a careful study 
of it, they take what seems to be the obvious 
course, reducing the pay roll, instead of the 
more economical course of studying closely their 
burden charges. Once my partner said to me, 

110 



COSTS AND THEIE CAUSES CONTINUED 

" Although your department of this business is 
not the factory, I want you to go into it every 
day for an hour or two, simply to find what is 
wrong." And for ten years I never went a day 
that I did not find something that could be bet- 
tered. Before a manufacturer can claim the 
right to have this whole people taxed for his 
benefit, he should show affirmatively that his 
methods are the best that are known. 

When a tariff bill was pending, some years 
ago, a representative of a crucible-steel works 
in Pittsburg came into my office and said, " I 
have a petition I would like to have you sign." 

I said, "What is it?" 

He replied, " It is a petition to have the duty 
upon our product advanced." He went on to 
say in answer to my question as to why they 
wanted this additional duty : " We have got to 
keep the standard of American living; we have 
got to hold up the American rate of wages and 
see that our American working people live on 
a basis far better than the pauper labor of Eu- 
rope." 

I said, " That is very interesting. How much 
of the proposed increase do you expect to add to 
your pay roll? " He said they had not yet given 

111 



THE NEW INDUSTKIAL DAY 

that serious consideration. I asked him if he 
would add any portion of this increased duty to 
the pay roll, and he replied that they had not 
come to that yet. 

I said to him, " I have already signed a peti- 
tion to have our duty reduced, but if you will 
enter into an agreement with me here and now 
that within a year after the duty is increased 
you will add any percentage to your pay roll, 
then I will recall my petition and sign yours 
and publish the facts." 

He said, " You could not expect me to do 
that." 

I said, "Now, Mr. So-and-so, you are paying 
ten per cent., are you not?" He said he was. 
I then asked him if his desire was not simply to 
pay a little better than ten per cent. He said, 
" Well, you know how these things go." 

The reduction of wage rate is always an ex- 
pensive process, involving serious, unseen, but 
real losses. 

Who shall calculate the difference in labor 
cost in a large factory between the output of a 
force of, say, a thousand mechanics, well paid, 
well equipped, well housed, with ample light and 
power, with machinery well arranged, with ma- 
ils 



COSTS AND THEIR CAUSES CONTINUED 

terial exactly suited to their purposes, with 
management that wins the loyalty and enthusi- 
asm of the men by liberal pay and just treat- 
ment; and the output of an equal force of men 
working in poor light, with variable, insufficient 
power, poor equipment, with wages cut to the 
smallest limit, with improper sanitary condi- 
tions, and harsh treatment? 

The difference between the output under 
above conditions may be the difference between 
ruin and dividends. You can not confine hu- 
man nature within the limits of a wage rate. 
Wholly outside of the rate of pay there is unlim- 
ited scope for brains in manufacturing. 

But in all this we have merely produced our 
goods and laid them at the factory door. They 
are not yet sold, and before their sale takes place 
another serious element of cost must be added. 
Therefore we must discuss selling expense. 
This selling expense is sometimes as large as 
the entire cost of labor, material, and burden. 

One need only to mention what it has cost to 
sell automobiles in order to get an immediate 
assent to that. Selling cost includes such items 
as traveling expenses, commissions, advertising 
in many forms, office salaries and rental, post- 
113 



THE NEW INDUSTEIAL DAY 

age and stationery, packing and shipping ex- 
pense, office equipment, office heat and light, and 
similar items. These show at once that they 
are of a very variable character. In some lines 
the cost of advertising alone is equal to the com- 
bined cost of all things else put together. In 
some industries traveling expenses are a very 
heavy item. Office expenses are very high in 
other industries, and in others office expenses 
might well be greater if they would so insure 
the ascertainment and reduction of burden cost. 
Some time ago, in answer to the question, " Do 
you keep your costs accurately?" a manufac- 
turer claiming to need protection told me: 

" I carry them in my head. I have been think- 
ing for some time of putting in a cost-keeping 
system. It would cost about $4,000 to install 
the system, and I have not yet seen my way clear 
to it." 

I said to him, " Do you know whether that 
room or this room or the other room pays you a 
profit or costs you a loss? " 

He said, " No." 

I said, " How can you economize if you can 
not tell that? How can you know where to 
economize? " 

114 



COSTS AND THEIE CAUSES CONTINUED 

In one concern well known to me the burden 
and selling costs were double that of material 
and labor, and labor was least of all. Mislead- 
ing and inaccurate statements frequently arise 
from lack of accurate accounting and cost keep- 
ing. Manufacturers are frequently ignorant of 
their own costs. There was one so ignorant of 
his own business that he had $400,000 stolen 
from him, and did not know it. Manufacturers 
have been often seeking the cheap rather than 
the economical. Cost is often assumed to be in 
labor where it is actually consumed in burden, 
or valuable by-products are neglected that would 
carry the burden cost in whole or in part. 

From the above I think it will be obvious 
that no assumption can ever be made that in 
order to reduce cost, wages need be touched. On 
the contrary, the field for saving outside of 
wages, and for the economical use of the funds 
spent in wages, is so large as to tax the powers 
of the human mind. 

There are four whole classes of cost, each com- 
prising numerous important items, that should 
be studied carefully before the question of re- 
ducing wages is so much as considered. 

I am going to take up presently three things 
115 



THE NEW INDUSTKIAL DAY 

not mentioned before, hidden reserves, com- 
pounded duties, and double incomes. They are 
rather obscure, but extremely interesting things, 
and we are led to think of them by the 
fact that I have not yet mentioned the serious 
element in cost called officers' salaries. Did 
you ever hear the proposition laid down that if 
the pay roll was cut the officers' salaries should 
be cut in proportion? And is it not perfectly 
sound that since the margin of living is nar- 
rower for the workman, the man who has the 
broader margin should be cut first and most? 
It would seem to be obvious. 

I have touched but lightly upon the abuse of 
the piecework system, but I know one factory 
where the rate was cut five times lest the men 
earn too much. 

Since it is clear that cost is a large and com- 
plex subject, of which the item of labor forms 
but one, and often a minor, part, and that cost 
is fluctuating and variable, it follows that no 
tax can be laid which will in different places 
and at different times always cover the differ- 
ence in cost between foreign and domestic pro- 
ducers. 

There is no such fixed difference in cost be- 
116 



COSTS AND THEIR CAUSES CONTINUED 

tween foreign and domestic producers. There 
is not, and there never can be, such a thing as 
fixity of cost. 

The difference between three domestic con- 
cerns in labor cost may be as great, or even 
greater, than the difference between foreign and 
domestic concerns in the same line. The at- 
tempt to adjust a tariff rate to cover such a dif- 
ference is therefore absurd. If it provides for 
the difference in the cost of foreign goods and 
of American goods made in an American fac- 
tory where those goods are expensively made, it 
would provide an enormous bonus for an Ameri- 
can manufacturer who made his goods economic- 
ally. If it provides for the difference between 
foreign cost and American cost for goods made 
in the most efficient American mill, it will not 
protect at all the American maker whose cost 
is high. You may have an injustice done one 
American manufacturer or an enormous profit 
paid to another, and you can not avoid it. It 
is in the nature of things. No law can get at 
it. And if your proposed duty provides for the 
average foreign cost — an impossible thing to 
learn — it does not provide, therefore, for the 
skilful and economical exceptions among for- 

117 



THE NEW INDUSTEIAL DAY 

eign manufacturers who could still compete. 

How shall anybody ever learn the exact for- 
eign costs of articles? Has any American man- 
ufacturer in our public discussions ever brought 
before us the actual cost sheets of his factory 
in full detail? They are the core and kernel of 
the manufacturer's business. He would not 
dare to produce them publicly lest his competitor 
find them out, but were they so produced this 
little theory and contention about the difference 
in cost between goods at home and abroad would 
oftentimes be found to be in favor of the United 
States manufacturer. 

There exists, therefore, in the difference of 
cost no possible basis for a tariff tax. Many 
general statements have been made by American 
manufacturers respecting the disastrous effects 
of lower duties on their business, but it is not 
what the manufacturer says he can do, but what 
he does do and what with proper management 
and equipment he is capable of doing that is the 
controlling factor. 

How many American manufacturers are will- 
ing to have their methods of production and cost 
accounts openly analyzed to show whether or 
not they could produce goods cheaper than a 

118 



COSTS AND THEIR CAUSES CONTINUED 

foreign competitor? There is no reason for tax- 
ing the whole American people because manu- 
facturers are either lacking in scientific study of 
their own business or unwilling to let the facts 
come out. 

The talk of the rate of wages as fixing the cost 
of production ought to end as being hopelessly 
ignorant and unscientific. 

The following may be safely affirmed: First, 
the rate of wages is not always, perhaps not usu- 
ally, the controlling element in cost; second, 
competition is not always, sometimes not at all, 
a matter of selling price ; it is often a matter of 
quality, often a matter of design, and often a 
matter of suitability; third, the cost of produc- 
tion is more influenced by rate of output and 
its quality than by rate of wage or hours of la- 
bor. 

About twelve years ago the head of a concern 
in Brooklyn decided that he would put his fac- 
tory on a nine-hour-a-day basis. He became sat- 
isfied that there was an element in the ten-hour 
day that was real, but difficult to see, namely, 
the " tired " hour. He became satisfied that 
the tenth hour was the " tired " hour — that at 
that time the point was reached under which a 

119 



THE NEW INDUSTRIAL DAY 

man could not work to the highest advantage. 
He put his factory on the nine-hour-a-day basis, 
and kept a very careful record of his cost. The 
wages remained the same. At the end of the 
year he was four per cent, to the good ; he made 
an absolutely larger product. 

I presume most people are aware of the ex- 
periment that took place in great shipbuilding 
yards in Scotland, where as a result of confer- 
ences between owners and their workmen, it 
was agreed that they would try the eight-hour 
day for a year, at the end of which time if the 
results showed no disadvantage to earnings in 
the eight-hour day it would be retained, other- 
wise the men agreed to go back to the nine-hour 
day. As a result, at the end of the year they 
retained the eight-hour day, because it paid. I 
do not mean to argue from this that you could 
go with an ax and cut everything arbitrarily to 
eight hours, but that the proper and reasonable 
adjustment of things to that will some day ob- 
tain is unquestioned. 

Given the scientific spirit in management, con- 
stant and careful study of operations and de- 
tails of cost — and this is the crux of the whole 
question — given the scientific spirit in man- 

120 



COSTS AND THEIR CAUSES CONTINUED 

agement, constant and careful study of opera- 
tions and details of cost, modern buildings and 
equipment, proper arrangement of plant and 
proper material, ample power, space, and light, 
a high wage rate m'eans inevitably a low labor 
cost per unit of product and the minimum of 
labor cost. 

I have seen laborers driving piles in Japan. 
Twenty women, each with a rope, lifted the pile. 
They were paid twenty cents a day in our money. 
I called the attention of a friend whose business 
was making pile drivers in New York to it, and 
we figured the cost of the piles. They cost four 
times as much to drive as it cost in New York. 
I was in a brickyard in Singapore, where I cal- 
culated the product of the men. Their rate 
of pay was thirty-five cents a day in our 
money. I happened to have in my pocket a 
very accurate cost statement of a brickmaking 
company in one of our eastern cities, signed by 
its president, and when the superintendent of 
the Singapore yard and I figured his labor cost 
together they were precisely the same. These 
principles have stood the test, in practice, of two 
panics and of a single year when we lost thirty- 
five per cent, of all our business at one stroke, be- 

121 



THE NEW INDUSTRIAL DAY 

cause the industry that gave it to us collapsed. 
New business had to be found from some other 
place. Yet no man's wages were cut. 

A steadily decreasing labor cost per unit of 
product is not inconsistent withy but on the con- 
trary is normal to, a coincident advance in the 
rate of pay for the work when accompanied by 
careful study of methods and equipment, as pre- 
viously suggested. Conversely, low-priced labor 
nearly always is costly per unit produced, and 
usually is inconsistent with good tools, equip- 
ment, and large and fine product, else such labor 
would not be low-priced. 

But, someone will be sure to ask, are not for- 
eign manufacturers as well placed as American 
manufacturers, save in the single exception of 
wages? That question must be faced. To ask 
it, however, is to answer it in the minds of all 
familiar with the details of the facts. The an- 
swer can only be in the negative. It is rarely 
claimed that foreign labor is as efficient as Amer- 
ican labor and never where American labor is 
permitted to do its best. A letter from the head 
of a great Japanese cotton mill says there are 
in his mill from three to four times the number 
of employees for the same number of looms 

122 



COSTS AND THEIR CAUSES CONTINUED 

that there are in an American manufactory. 

I visited a rubber factory in Singapore where 
the superintendent, a Frenchman, told me it 
took five Malays to do one Frenchman's work. 
In an English shop I saw five men pushing a 
truck to move, say, four hundred pounds, for 
which they were paid $1.25 each, or $6.25 total, 
and an American manufacturer who was with 
me shrugged his shoulders when he saw it and 
said he would have a small crane and a man at 
$3.50 a day to run it. It is not claimed that 
the European mechanic is of as high morale and 
quality as the American, and this may be illus- 
trated by two remarkable stories, one of which, 
at least, is typical. 

In a large factory in England, in which I 
spent ten days, there was one young man who 
seemed very industrious. I said to his em- 
ployer, " Why do not you raise his pay ; I think 
he is worth it." 

He said, " I can not." 

I said, " Can not ; what do you mean ? " 

" Well," he said, " he will not let me raise his 
pay. That man earns two pounds a week — 
$10. I have offered him ten shillings extra, 
and each time he lays off just enough to make 

123 



THE NEW INDUSTRIAL DAY 

the two pounds weekly which he desires." 

The point I want to make clear is that this 
is typical, and that if you are running a factory 
in Manchester, Birmingham, Leeds, Glasgow, 
Oldham, you would have to deal with some men 
whose pay you can not raise. They will not ac- 
cept it; they do not want more pay. You find 
there a condition we know nothing about here. 

Now, secondly. A large European manufac- 
turer said to me, " What allowance do you make 
in your factory for loss of time from drink?" 

I said, " None." 

" Oh," he said, " do be serious." 

I said, " I am perfectly serious." 

" Well/' he said, " I know your workmen 
drink." 

I said, " They do; but no self-respecting Amer- 
ican mechanic will work at the bench perma- 
nently alongside a drunkard." Now, that is 
true of our American mechanics. The first-class 
mechanics in this country will not keep in a 
shop the man who is habitually a drunkard ; they 
will freeze him out. In fact, the superintend- 
ent would not have him in the place. 

I am told and my general observation con- 
firms it, that there is a regular loss in Birming- 

124 



COSTS AND THEIB CAUSES CONTINUED 

ham of about four per cent., in Manchester of 
about eight per cent., and in Glasgow of about 
twelve per cent, of the total time of the factories 
on account of absence from over-Sunday drink- 
ing, and that in Glasgow they do not expect to 
get a full shop until Wednesday morning. I be- 
lieve this is a thing against which the English 
master struggles without success, namely, a 
force of men often sodden with drink, with 
which we do not have to deal in this country at 
all. 

European concerns are eagerly seeking Ameri- 
can equipment and studying American methods. 
Concerns in Berlin, Paris and many other 
places, are equipped with American machinery. 
They send men over here constantly to study our 
American cost of production. Rarely is the 
rate of output abroad equal to that in America. 
My French competitor told me they could not 
do such work as we did. Nowhere else is the 
problem of saving labor cost so closely studied 
as it is here. Labor-saving machinery is an 
American specialty and product, and the con- 
cerns in Europe that manufacture with the best 
labor-saving machinery are those that have 
taken their inspiration from studying here. 

125 



THE NEW INDUSTRIAL DAY 

I have known the heads of great European 
concerns who kept their sons in the United 
States year after year studying our methods of 
production. Nowhere is the cost transportation 
so low as it is in America; nowhere are such 
facilities offered for transit as in America; no- 
where is the discipline in a factory so close, so 
sharp, and so keen, as in an American shop ; and 
in proportion to the pay of the men being high, 
that discipline becomes voluntary. Earely 
abroad do sanitary conditions equal those in 
America, and nowhere do living conditions equal 
those in America. Nowhere is there a more ef- 
ficient type of men, who are therefore better pro- 
ducers, but the standard of living is fixed by 
the man and not by the pay roll. It is not de- 
pendent upon his wage, but upon the relation 
between his income and his outgo. Merely to 
pay a man $5 a day does not create a standard 
of living. That depends on the man himself. 
In India men wear upon their shoulder a sign 
which says they are peons — " Peon No. 1," and 
so on. Peonage is a crime in this country, and 
the difference between the two represents the 
standard, not of pay alone, but of manhood. It 
is admitted that some elements of burden cost 

126 



COSTS AND THEIR CAUSES CONTINUED 

more in other countries. Compare the taxes; 
compare the question of military service, which 
interrupts no American laborer, but does seri- 
ously interrupt the operation of shops abroad. 
It is admitted that the problems of burden and 
selling cost are nowhere so closely studied as 
here; and, finally, the whole question of scien- 
tific methods of management, now so common, 
is American, and the only men who teach it are 
Americans. 

From the above 'sketch it is affirmed, without 
fear of successful contradiction, that American 
production to-day is often as cheap as or cheaper 
in the labor cost per unit than foreign, and, so 
far from needing protection, it needs to be set 
free, that we may conquer the world. 

But why do not American manufacturers al- 
ways sell as cheaply as foreigners? Sometimes, 
they privately say, because the law permits high 
prices and they, of course, sell in the highest 
available markets. 

Did you ever think of what the hidden reserve 
in a factory is or may be? You may never 
see it in the books nor know it by the 
statements. A statement may be made that 
may seem perfectly clear and yet not show 

127 



THE HEW INDUSTRIAL DAY 

the facts. There was a concern that was 
profiting largely. It was not thought desira- 
ble thatj for purposes of taxation, the profits 
should appear. So they discovered that their 
real estate was not so valuable as it had 
been before, and they marked $100,000 off the 
valuation of it. At the end of another year 
or two, during which they had done well, they 
found that their real estate had depreciated fur- 
ther, and they marked another $100,000 off the 
value of it. There was a hidden reserve of 
$200,000 which no statement showed. And yet 
that statement would be filed as an accurate 
statement of fact. There are many cases of that 
or of a similar kind. 

It is interesting to consider the righteousness 
in a manufacturing concern of officers drawing 
a large income as officers and also drawing an- 
other income as stockholders. Is it just that 
they should ask that we tax our fellow men in 
their behalf when certain men in that concern 
are drawing a large salary as officers and large 
dividends also as stockholders? And whatever 
the facts may be, is it not but right and fair that 
they should be clearly known when they come 
and ask for taxation in their behalf? 

128 



COSTS AND THEIR CAUSES CONTINUED 

Consider what compounded duties amount to 
when you buy something from a retailer. Some 
one comes to the manufacturer for an estimate 
of cost. The original maker reckons what the 
actual cost of the material in that thing is to 
him. That includes the amount by which the 
price is enhanced by the duty. He forgets the 
duty. He takes the total cost to him and adds 
his percentage of profit, and it goes to the whole- 
sale dealer. The secondary manufacturer, per- 
haps, goes to the wholesale dealer and buys 
from him. The wholesaler takes the total cost, 
which includes the duty plus the original per- 
centage of profit, and he adds to that total his 
percentage of profit and thus compounds the 
duty. He so sells it to the secondary manufac- 
turer, who, in turn, sells it to his customer, an- 
other wholesaler, perhaps, and again the duty is 
compounded. 

The wholesaler sells it to a retailer, and again 
it is compounded, and by the time the retailer 
sells it that duty has been compounded, in ex- 
treme cases, perhaps four times. It can not be 
prevented. So long as the duty forms part of 
the original cost it must be compounded over 
and over again. You can not escape it. 

129 



THE NEW INDUSTRIAL BAY 

I believe that protection is an injury to Ameri- 
can manufacturers by limiting their scope and 
by narrowing their horizons. I believe it costs 
them enormously in the loss of foreign business, 
and that is one reason why manufacturers in 
this country are so rapidly ceasing to be protec- 
tionists. But one other reason why the manu- 
facturers of this country are abandoning the 
protectionist faith is that their plants have been 
stimulated to become so large that only in rare 
years has the demand in this country become 
enough to take their total product, and they 
have to sell it abroad. 

And so long as they must pay the high price 
for materials they find it is sometimes difficult 
to sell abroad, although such is the efficiency 
and therefore the cheapness of their labor in this 
country, as compared with that of Europe, that 
it does oftentimes enable them to sell their goods 
in foreign markets. 

Consider the position of a manufacturer 
whose raw material is, as it always must be, the 
product of another industry, who finds his home 
market restricted or oversupplied, and turns, as 
he must needs turn, abroad for a market. He is 
handicapped by compounded duties on his raw 

130 



COSTS AND THEIR CAUSES CONTINUED 

material in a market where, by reason of the 
law, prices are often high. Nothing but the 
keenest application of brains to equipment and 
to output, coupled with the exceptional efficiency 
of his workmen, permits him to secure the 
needed outlet. 

An overstocked domestic market is often no 
theory, but a real condition. Take away the 
shackles that bind the manufacturer, and when 
these conditions occur he will be free to sell in 
the world's markets, without touching his pay 
roll. 

Protection, however, causes a manufacturer al- 
most inevitably to depend on the Government 
for help, instead of carefully and minutely 
studying the details of his own business. The 
manufacturer should be his own severest critic 
and should never be satisfied with his results. 
Protection, however, has enabled many Ameri- 
can manufacturers to prosper by selling to their 
fellow countrymen at prices so high that they 
have not thought it necessary to study their own 
business closely, because they depend upon Gov- 
ernment baching. 

Two men went out of a meeting of one of the 
committees of the House of Representatives, on 

131 



THE NEW INDUSTKIAL DAY 

the Capitol steps, at the time a tariff bill was 
pending some years ago; as they did so one 
put his hand on the other's back, " And now," he 
said, " if we can not make money we never can." 
Such stories as these are the commonplaces of 
manufacturers' offices. 

Now, however, that scientific manufacturing 
as a profession has begun and is growing, the 
fact is found that we can and often do produce 
as cheaply here as abroad, not in spite of, but be- 
cause of, the higher rates of wages here, which 
are but a partial measurement of the higher effi- 
ciency and character of the American workman 
and of the fine equipment put at his disposal. 



133 



CHAPTER VI 

HALF WAY ON THE INDUSTRIAL ROAD 

XJOT long ago the superintendent of a south- 
•^ ern cotton mill said to his employer, "I cut 
down our labor cost last month." 

"Did you reduce the wages?" he was asked. 

"No, I raised them but I got more done." 

During the progress of a railway construction 
contract in Virginia, the negro laborers were 
paid more than was usual in such work and care 
was given to providing them with the right 
tools at the right time and they were well fed 
and housed. Not only did the contractor find 
discipline easy to enforce but his work went 
faster than he had expected and cost less. 

In one of our great industrial cities are two 
well known firms making similar goods. The 
head of the trade union which has many of its 
members employed in one of these factories, said 
recently, "A man never leaves that shop save 
for old age or death. It's a square place to 
work, They treat their men well and never 

133 



THE NEW INDUSTKIAL DAY 

have any trouble." The other concern has had 
serious difficulties with its help during recent 
years and has been at times shut down because 
of strikes. 

Calling one day at the office of a large iron 
works, I found a fine office building abound- 
ing in light and air and in facilities for rapid 
and easy working. Passing thence into the shop 
I noted amid grime and dirt that the lavatories 
for the men were such as would disgrace the 
worst old city tenement. 

We have moved far on the industrial road 
since the days of Arkwright and of Watt. Al- 
most every step along the way has been con- 
tested; now the resistance of the worker has 
been active and again the resistance of the em- 
ployer. Yet the advance, so far as it has gone, 
has been mutual but it has been at the cost 
of mutual strife and with sad waste of money, 
of effort and of life. None of us anywhere 
would go back to the old conditions. There is 
far less of pain and of poverty than there was. 
The humblest has a larger outlook and a broader 
opportunity than many of the well-to-do had a 
century and a half ago. 

Certain things are well established — such as 
134 



HALF WAY ON THE INDUSTRIAL ROAD 

the use of machinery and its constant develop- 
ment. America holds its place as the greatest 
of manufacturing nations because of the pecul- 
iar aptitude of our people for inventing and 
using mechanical devices. We all know now 
that the use of mechanisms in production re- 
duces cost, saves effort, improves quality, and 
that the men who run machines receive a higher 
wage for shorter hours and less exertion than 
did the old hand-workers making the same 
goods, and that their product sells at a lower 
price. In thousands of factories to-day study 
is continually given to mechanical improve- 
ment and the old is rejected and the new 
adopted with bewildering speed by men and 
managers alike. The publicity departments of 
great industries are kept busy promoting the 
sale of new products and withdrawing those 
that are superseded. The patent offices of this 
and other lands are full of devices whereby me- 
chanic arts are made to serve men in novel ways. 
Certain work in one of our Eastern machine- 
shops had always required finishing by hand. 
What was really the lesser part of the product 
cost more than the larger part of it because of 
the hand work, a condition with which no good 

135 



THE NEW IKDUSTEIAL DAY 

mechanic is content. A bright young machinist 
watched this day by day for weeks and at last 
prepared a device which at a stroke removed the 
hard hand labor and did the finishing work by 
power. Such cases occur daily. 

It will hardly be questioned then that modern 
industries represent a great advance over the 
working and producing conditions from which 
they have sprung. We have struggled upward 
many long years and have raised ourselves far. 
But just as little will it be questioned that there 
is need for a greater advance. " The cry of the 
children " is no longer heard from English 
mines but it comes clearly from among the home 
workers in many a city tenement. Little fin- 
gers are still cramped and growing lives still 
dwarfed by working long hours in bad surround- 
ings for a petty wage unwillingly paid by exact- 
ing or ignorant employers. Profit is being 
wrung out of the struggle of whole families for 
scanty self-support. Labor receives indeed in 
some places a fair response to its righteous de- 
mands for a living wage and reasonable work- 
ing hours, and yet we all know that " an eye 
for an eye and a tooth for a tooth " is still the law 
under which many workers labor. The out- 

136 



f 

HALF WAY ON THE INDUSTEIAL ROAD 

look of employers is still narrow and the con- 
sciences of many of them are dull. Within a 
very short time I have heard a manager tell a 
slight boy he was employing that his hours were 
from " eight to eight every day." 

Let us stand before a great factory and think 
of those who are interested in it. At the office 
door enters the man in control. Often he is not 
the owner but one among many owners chosen 
to act for the others. In a true sense he is a 
trustee for those whose money made the mill. 
Upon its success his livelihood and their profits 
depend. Among these owners often are women 
and children. Their capital is at risk and is 
largely locked up in buildings, machinery and 
material. The proportion of their assets that is 
liquid is small. The demand for dividends is 
imperative. The risk is large. The man who 
runs that mill and by his skill, wisdom and ex- 
perience provides employment for workers and 
profit for owners, should be well paid; the own- 
ers, because their property is tied up in assets 
which are subject to a serious business risk, are 
entitled to a reasonable return based upon the 
actual conditions of their industry. They can- 
not, if they will, turn their property quickly into 

137 



THE NEW INDUSTRIAL DAY 

cash and it is subject to constant depreciation 
in value. Money invested in such an enterprise 
as a textile or paper mill should earn more, 
therefore, than if it were funded in prime se- 
curities quickly convertible. It is natural that 
those whose money is in such industries should 
shrink from any sudden change in business con- 
ditions. 

At the large mill gate enters the throng of 
workers. What they use in that mill is not 
their own. They, in a sense, are also trustees 
in the use of tools, material and machinery be- 
longing to others. Their own property is not at 
risk but their living is. So far as livelihood is 
concerned, the mill worker has at stake what 
the mill manager and the mill owner has at 
stake. Upon the faithful doing of the daily 
task by the mill worker depends the owner's 
profit. Upon the wisdom and strength of the 
management, the homes, the comfort, the health, 
perhaps the lives of the workers may depend. 
The mill is the common ground where owner, 
manager and worker meet. It should be the 
servant of them all; often it is the master of 
one or all. As the money of the owners is at 
risk in the mill so is the salary of the manager, 

138 



HALF WAY ON THE INDUSTRIAL ROAD 

and so are the homes of the workers, but the 
margin of safety for those homes and families is 
less for the workers than for the manager or 
for the owners. We expect sensible owners to 
permit the manager to work under such condi- 
tions that he can do his best. It is right that 
both owners and manager should provide for the 
workers the conditions under which they also 
can do their best. As the business risk of the 
owners must have consideration, so the home 
risk of the workers is entitled to care. 

Outside the mill and often distant from it is 
the third and greater party in interest — the 
public — the people who buy the goods that are 
made there. Out through the mill gate go cars 
of goods to this public, and these consumers of 
the mill's product are interested in the design, 
the quality, the cheapness of those goods, and 
in the promptness and regularity with which 
they are supplied. The right of the consumer 
to standard goods at a reasonable price is just 
as real as the right of the owner to a reasonable 
profit. 

In Soerabaya, Java, I saw dredging and filling 
done in a strange way. Naked men with small 
baskets dived from boats in midstream, scraping 

139 



THE NEW INDUSTRIAL DAY 

the sandy mud from the bottom into these bas- 
kets, from which they loaded the boats. These 
then were rowed ashore and again with hand 
baskets the mud was dumped upon the marshy 
spot where the building was to be erected. 
When a suction dredge is substituted for such 
a crude process all parties gain — the owner of 
the dredge, the workers on the dredge, and the 
customer for the dredge. The owner receives 
more profit, the worker is paid more wages, and 
the cost is less. 

Whether they will or not, these three parties 
in interest in the mill of which we have spoken 
can not be separated. They are united by bands 
not less strong that they are unseen, nor less 
potent that at times one or another of these par- 
ties seek to break or ignore them. A mill will 
not permanently prosper if the owner seeks his 
profit at the expense of the worker, whether it 
be the expense of the worker's pocket or health 
or brains, nor will it long prosper if the owners 
seek profits without regard to the consumer, nor 
will the worker or consumer profit long if the 
goods are sold more cheaply than they can be 
made. Loss to the mill owner means, ulti- 
mately, loss to the mill worker and loss to the 

140 



HALF WAY ON THE INDUSTEIAL EOAD 

consumer, too. Nor will the worker long profit 
if, thinking of himself alone, he demands an 
undue share, more than can justly be had, of 
what that mill produces. These three must get 
along together. How can it best be done? 

Above all financial considerations rises the 
human interest in our theme for we deal with 
the homes and lives of men. If into dark 
places, light may come; if for penury, plenty 
may be had ; if for sickness, we may have health ; 
if for anxiety, we may substitute peace, surely 
it is worth doing. Not, indeed, that we may do 
these things all at once, but we may open the 
way so that as time passes the clearer light of a 
better day may dawn. Can we translate the 
laws of industrial production into terms of hu- 
man happiness? No less than this is what must 
some day be done and is what we seek to begin 
to do. 

A recent book says: "What workmen want 
from their employers beyond anything else is 
high wages, and what employers want from their 
workmen most of all is a low labor cost of man- 
ufacture. These two conditions are not opposed 
to one another, as would appear at first glance. 
On the contrary, they can be made to go to- 

141 



THE NEW INDUSTRIAL DAY 

gether in all classes of work without exception." 
The writer adds that he speaks "with the ob- 
ject of advocating high wages and low labor 
cost as the foundation of the best management." 

A prominent manufacturer says : " The 
American manufacturer to be successful must 
be an economist, know exact costs, and have the 
courage to abandon slipshod ways of product." 

Another manufacturer says : " When the 
times comes, and I think its approach is near, 
that as much thought and study and as big 
brains are devoted to the problem of labor 
as have heretofore been devoted to and absorbed 
by the problems of financing, selling, and equip- 
ment, when we study the man behind the ma- 
chine as closely as we do the machine, we shall 
see ways of making the one fit the other more 
closely than we do now." 

All about great mills are instruments regulat- 
ing machinery; means are provided that ma- 
chines shall not be overstrained, that their prod- 
uct shall be within their power regularly to 
produce without damage to the machine; we 
even care lest machines get overheated and, in 
a true sense, lest they get overtired. We know 
that a tired machine gives out and its life is 

142 



HALF WAY ON THE INDUSTKIAL EOAD 

neither so long as it should be, nor its product 
so large nor so good as it ought to be. We pro- 
tect it against dust, we lubricate it, we even let 
it rest, yet that machine is dead, inert. When 
shall we learn that to be most productive a liv- 
ing, responsive man needs also not to be over- 
strained, that he needs rest, that his product 
must for economy's sake be always within and 
not beyond his powers? Until the course we 
take with our machinery is recognized as of 
equal application to our men and women work- 
ers we shall not have solved the problem of pro- 
duction. So long as we extract from men and 
women the most possible for the least return to 
them, we are working against the deepest laws 
of nature and of finance; our sight is short; we 
are but blind leaders of the blind. The normal 
resistance of a working force to pressure under 
conditions of a narrow wage and long hours is 
not an element that leads to continued profit. 
And here, once for all, let it be said that no man- 
agement is scientific or permanently profitable 
which either promotes or permits human over- 
strain, or which taxes the future of women and 
children. 

In the city of Worcester is a mill employing 
143 



THE NEW INDUSTRIAL DAY 

fifteen hundred girls. It stands in pleasant 
grounds made attractive to the eye by well kept 
lawns and shrubbery. Entering, one finds that 
the promise of the exterior is fulfilled within. 
The oflices are light, spacious and equipped with 
modern appliances. So is the factory itself. It 
is a joy to one who appreciates the money value 
of good living conditions and a happy working 
force to look along the great sewing rooms. 
Here is modern industry at its best. On all 
sides is light falling through spacious windows. 
The room is sufficiently high to avoid any sense 
of cramped space. All is white and clean. 
There are neither shafting, belts nor pulleys. 
The air is fresh and free from dust. One looks 
down the long lines of electrically driven sew- 
ing machines and sees hundreds of neat-looking 
girls, most of them in white shirt-waists, sitting 
quietly but busily at piecework, talking now 
and then with one another, but wasting neither 
time nor energy. Among them move the quietly 
dressed forewomen, not so much watchful for the 
sake of discipline, for such a force in such cir- 
cumstances needs little of that, but acting as 
instructresses, counseling here, aiding yonder, 
helping the less experienced, now and then cau- 

144 



HALF WAY ON THE INDUSTRIAL KOAD 

tioning those who would overdo. Small won- 
der that of this mill it should have been recently 
written : " One notices that all the employees — 
even the very youngest girls — show unusual in- 
telligence, and the thought automatically sug- 
gests itself that this must be an unusually de- 
sirable place in which to work, a place workers 
would seek, a place which would not need to 
hunt for help when needed. On inquiry, we 
learn that there is usually a ' waiting list' of 
applicants for work in the factory, and these the 
most desirable workers in a city of nearly 
150,000 inhabitants." 

Women in that mill earn from nine to fifteen 
dollars a week. The products of their hands are 
sold in fifty different countries. On the large 
table in the center of the office is a silver loving 
cup — a gift to their employer, in which every 
one of the mill workers took part, on the occa- 
sion of the fiftieth anniversary of his connection 
with the business. When I congratulated him 
upon the broad and skilful management of his 
plant, he said that they were conducting there 
an enterprise which they regarded as a social 
experiment and which they were happy to find 
lucrative. 

145 



THE NEW INDUSTKIAL DAY 

As a manufacturer myself it has been my ex- 
perience that the concerns with whom it was 
easiest to compete were those who had stopped 
half way on the industrial road. They gave due 
thought, indeed, to machinery, buildings and to 
general equipment. They were careful about 
their materials and kept in touch with the more 
obvious of modern methods of accounting and 
management, but the greatest force in their in- 
dustry — the responsive power of their men to 
leadership, they left untouched. They paid the 
usual rate of wage or had a fixed rate of pay 
for a certain job. They allowed their men to 
earn a certain sum weekly at piece-work and 
when more was earned they cut the piece 
work rate. They lacked adjustment to the 
human element or close co-operation with it. 
But when among competitors was one who 
had traveled farther along the industrial way 
- — had gone so far that he could see the power 
of the human force, could get it working with 
him and responsive to him, then that concern 
was dangerous to its rivals. Its product would 
come out of better quality or at lower cost or 
with fewer seconds or with less delay, or with 
all of these things, and it was difficult to meet 

146 



HALF WAY ON THE INDUSTRIAL ROAD 

that competition. The shop where the em- 
ployer and the employee are one force, pulling 
together, is the most serious of competitors. 

During the hard time of 1893, the head of a 
large manufacturing concern in the central West 
sat sorely troubled in his office. Through the 
long afternoon he had gone carefully over his 
business statements, endeavoring to adjust him- 
self to the adverse winds that were blowing. 
For orders that had been pending he had pur- 
chased largely only to have the orders canceled 
when he could not recall his purchases. Loans 
that were needed to tide over stringent con- 
ditions could not be had. Banks not only de- 
clined further accommodation but were calling 
for payment. It was next to impossible to col- 
lect funds due him. As the day closed he could 
see no clear way out of his troubles, and when 
the factory whistle blew he closed his books with 
a sad heart. There was a knock at the door; 
opening it he found a committee from his work- 
men who said the men wanted to see him in the 
factory yard. He and his men had been friends 
through many years and it was the thought of 
what might happen to them that was now one 
of his serious troubles. He could not believe 

147. 



THE NEW INDUSTKIAL DAY 

they meant to make demands upon him at this 
crisis. He went with the committee to the steps 
where he could see the men, waiting with their 
dinner pails to go home, and then one of the 
committee said to him something like this: 
" Colonel, we know times are hard and orders 
scarce. We hear that money is pretty hard to 
get, and we just want to say that a lot of us 
have worked here with you for many years and 
we have saved some money. It is in the savings 
bank, and we are here to tell you that it is at 
your disposal, if it will help you through this 
squeeze." And the strong man bowed to tears, 
scarcely able to speak his thanks, went back 
to his office glad in the thought that the great- 
est thing in his industrial life had come to him, 
and ready for any sacrifice and effort. 

I should greatly fear to be the competitor of 
a house in which such a spirit existed, unless the 
same spirit were behind me also. 

There will be those who will say that the in- 
cident just given is hardly credible amid the 
bursts of discontent we all hear, and yet it is a 
short time since I was telling this same story 
to a friend who said that in Florida he knew 
an employer toward whom on the part of his 

148 



HALF WAY ON THE INDUSTRIAL ROAD 

workmen the same regard existed. One day, 
something having been said about hard times or 
shortness of funds, two of his Italian employees 
came to him with money which they had saved 
and offered it to him for his use. I shall never 
forget that during the panic of 1907, when things 
were worst, I was voluntarily tendered a loan 
by one of my own trusted employees. 

Some of our manufacturers, ignorant of the 
mighty power that a happy working force may 
bring to their support, seem to seek to crush it 
as if they did not want that help. It was dur- 
ing the noon hour in a large New England 
machine shop, and I was going through the plant 
with the proprietor. The building was new, the 
equipment fine and well arranged, and all on 
the physical side was of the best. The one 
o'clock whistle blew. An instant later we passed 
a young mechanic sitting at his bench whom I 
could see was just finishing reading a paragraph, 
in the newspaper he held in his hand. With 
loud and abusive language his employer at- 
tacked him — " Here, don't you know any better 
than to be reading newspapers after the whistle 
blows," and more. It was hard to stand by and 
say nothing, perhaps by silence letting the 

149 



THE NEW INDUSTRIAL DAY 

young man think I sympathized with such be- 
havior towards him. I have not forgotten the 
quiet look the workman gave his employer while 
silently he put down his paper and took up his 
tools. The employer had some remarks to make 
as we went on about how hard it was to get on 
with labor. 

One must not seem unaware of the " soldier " 
in industry, for doubtless " soldiering " exists. 
It was vividly described before me by one 
of the leading advocates of so-called " scientific 
management " when I was a member of a Con- 
gressional Committee inquiring into that sub- 
ject. There can be no doubt that cases exist 
where output has been and is deliberately limited 
by workmen. On the other hand the attitude 
of my friends, who are mechanics, toward the 
man who does not do a fair day's work is rather 
intolerant. They do not want him on the next 
vise. One wonders about certain things con- 
nected with " soldiering." It is often more com- 
fortable to do a steady day's work than it is to 
loaf, and sometimes when the speed of machines 
is fixed it takes quite a little effort and thought 
to "soldier." Can it be that "soldiering" is 
the reaction against " speeding " ? To what ex- 

150 



HALF WAY ON THE INDUSTRIAL ROAD 

tent is it the quiet resistance of intelligent men 
to what they regard as imposition? If this is 
in any degree true, and to the extent to which it 
is so, is it not evidence that both the parties 
to the " speeding " and the " soldiering " have 
traveled but half way on the industrial path and 
have yet to learn to pull together? 

The spirit of the officer at the head of an 
army filters down throughout the rank and file, 
and if that spirit is one of strong leadership, 
we all recognize that what we call a fine morale 
is thereby infused into the entire force. The 
power which beat the Austrian, despite his num- 
bers, at the battle of Leuthen, had its origin in 
the spirit of the talks the night before between 
Frederick the Great and his rough Pomeranian 
grenadiers around their campfires. Leadership is 
as great a power in industry as in war or poli- 
tics. In war it leads men meagerly paid to en- 
dure cheerfully privations and sufferings, 
wounds and death. It supplies a spirit far be- 
yond the bounds of military discipline and it 
upsets kingdoms and wins empires. A strong, 
just and kindly man at the head of a great in- 
dustry is felt by all the workers down to the 
humblest servant in the plant, and they will 

151 



THE NEW INDUSTKIAL DAY 

serve him with unselfish devotion when once they 
have absorbed his spirit. Public discussion is 
full of complaints of labor against capital and 
of employer against employee. There are wars 
and rumors of wars, and as we look upon the 
surface of things the industrial sea seems all in 
storm. Meanwhile, in a thousand mills move 
quiet, strong currents of industrial activity where 
men work with men side by side amid cheer- 
ful, happy and improving associations. We 
have, it is true, gone as yet but half way, but we 
are still on the march and the confusion and the 
tumult are but the noise of those who would, 
upon the one hand, arrest that march and, upon 
the other, accelerate it 



152 



CHAPTER VII 

THE RISE IN HUMAN VALUES 

TF in imagination we try to visualize the his- 
* tory of the human factor in industry, the far 
background of the picture will be filled with 
those masses of Oriental toilers through whose 
painful labor by crude methods the Pyra- 
mids and Baalbec were created. Nearer we 
shall see the slaves of Roman days, the serfs and 
villeins of the Middle Ages, the turbulent arti- 
sans of the dawn of modern industry, the stren- 
uous toilers under the early factory system, and 
in the very foreground the skilled mechanics of 
to-day. The movement up from slavery to free 
labor has covered centuries and its latest fruit 
has ripened within the memories of living men. 
Looked at from the human side alone, it is a 
far cry from the bricks made without straw and 
equally without pay, in ancient Egypt to the 
voluntary, well-rewarded service under healthful 
conditions in our best modern industries. 
Yet to-day in some lands the freedom of labor 
153 



THE NEW INDUSTRIAL DAY 

is more apparent than real. During the winter 
of 1911 there came on board a steamer running 
from Java ports to Singapore, a group of fifty 
or more men on their way to work under con- 
tract as laborers in the plantations of Sumatra. 
They were the lowest class of black coolies, free 
from clothing save a breech-cloth, each carry- 
ing all his worldly goods in a small hand-par- 
cel. They were quartered on the lower deck 
where they spread out thin cloths and made 
shift to sleep and eat. I stood one evening look- 
ing down through the hatch at the mass of naked, 
shining black bodies that lay close together in 
the crowded space beneath, and with thoughtful 
spirit recalled the laborers of my own land. The 
picture of one of these came clearly before me 
then. He was an humble worker whose simple 
duty it was to sweep a factory yard. He took 
pride in that modest task and the yard was kept 
clean. So also was his little flat in the old 
tenement overlooking the yard, where his thrifty 
wife made a bright, sweet home for her industri- 
ous husband. There a daughter grew to fine 
young womanhood. Her father used to speak 
of her with pride, and both her parents toiled 
and saved that she might rise. She was sent to 

154 



THE RISE m HUMAN VALUES 

the grammar school, then to the high school, and 
at last, with great joy, to the normal college, for 
the cleaner of the factory yard was ambitious 
for his child, and his life was enlarged in pro- 
viding for her beyond all he had ever had him- 
self. 

The difference between the Javanese coolies 
who seemed stupidly content in the steamer's 
hold, and the laborer in America unselfishly striv- 
ing that his children might advance, represents 
a marvelous increase in human values. Was it, 
one wonders, because some sense of his misery 
came over him that one of these coolies plunged 
overboard to death? Or had he left behind in 
Java something that to him was home? Into 
the sea he went just off the port of Batavia, and 
reckless of sharks or drowning, struck out for 
the land. The vessel stopped, lowered a boat 
and made careful search for him. For a time 
his head was seen — a black bobbing spot on the 
water, then it was gone. The boat came back 
in silence, was hooked to the davits and drawn 
to its place and the ship went on. Some said 
a junk near had picked him up, but this was the 
expression of a hope rather than a belief. His 
days of toil under the burning heat of the trop- 

155 



THE NEW INDUSTKIAL DAY 

ical sun and all his misery were over. 

Great as has been the development from 
savage and from slave labor, it would be sad to 
feel that the rise of human values had stopped. 
It may be comforting to compare the lot of the 
average workman in America with that of the 
toiling masses of ancient Egypt or of the Ori- 
ental coolies, but a careful look about us will 
tend to disturb our complacency. With all our 
boasted progress we still waste human life at a 
fearful rate. 

A battle in which fifty thousand men were 
slaughtered would shock the world, yet there will 
die in America within the next calendar year at 
least five hundred thousand whose deaths are 
needless, and they will pass out of life almost 
without public notice. A Titanic disaster fills 
us with horror, but more lives than were lost 
on that ill-fated ship perish every day in Amer- 
ica from preventable diseases. It is of official 
record that human beings fairly capitalized as 
working power are worth in this country at 
least three times the total of our other capital, 
and that, conservatively estimated, the needless 
waste of human life and strength costs us a 
thousand millions yearly. We are beginning, 

156 



THE EISE IN" HUMAN VALUES 

however, to understand these things and to deal 
with them. Some time we shall treat tuberculo- 
sis in a sensible way, as a costly waste which 
we cannot afford, and shall handle it in practical 
economic fashion. Prof. Irving Fisher has 
pointed out, that by spending, say two hun- 
dred thousand dollars in treating tuberculosis 
patients, we may save human values actually 
worth two millions, or invest our capital in hu- 
man lives at a financial return to the state of 
ten to one. 

But if our estimate is just, we shall not be 
content with saving wasted lives, but shall find 
it of primary importance to stop the awful 
loss from preventable sickness. If we may 
argue from English statistics, it seems prob- 
able that about three million people in the 
United States are seriously ill at all times and 
we are told that half of this can be avoided. 
The number who are slightly ill, sick enough 
to reduce their efficiency but not enough so to 
give up their work, is probably larger, and the 
presence of such men and women in our mills 
is a real drain upon our industries. Time your 
machines never so carefully, a half -sick operative 
will not get the best results from them. Indiges- 

157 



THE NEW INDUSTRIAL DAY 

tion or a severe cold or a bad headache does not 
allow him who endures it to do the full 
work of a well person. Everyone knows also 
that he cannot work efficiently when eyes or 
brain or hand are fatigued. The factory in 
which the average of health is high, has at the 
same wage rate an advantage in labor cost over 
similar plants in which health conditions are 
poor, because of the greater and better product 
of well men. Goods cost more which are made 
by tired hands. For these reasons the manage- 
ment which has for years given care to machin- 
ery, materials and methods begins now to give 
thought to men, not merely as to their skill or 
wages, but as to their physical fitness to earn 
their wages to the full. Preventive medicine 
has a definite place in keeping the product of our 
industries up to the mark. Yet while we main- 
tain repair shops to look after machines, there 
are few industries that definitely maintain an 
organized department either to keep its men in 
repair or to prevent their falling into disrepair? 
True, a practical difficulty which is a result of 
human liberty comes in here. No employer can 
make his men so behave outside of working hours 
as to keep themselves in health. Nevertheless, it 

158 



THE RISE m HUMAN VALUES 

still remains " up to him " to prevent their being 
over-strained nervously or physically during the 
hours of toil, and influence within the shop for 
healthful conditions and instruction there given 
in hygiene react upon the men in their homes. 
He, who appreciates the value of cleanliness in 
the place where he works, will not be content 
with a dirty dwelling. If a father learns the 
value of thorough ventilation in the shop, his 
children will in this respect be better off. 

The present trend towards saving effort and 
keeping the human mechanism in our factories 
in good working order does not arise from al- 
truistic motives but from economic ones. In ac- 
tual practice in a mill it makes a difference in 
the financial results whether among a thousand 
men one hundred or three hundred or more are 
out of health. Any large amount of impaired 
vigor among his operatives is a condition whose 
continuance an intelligent manufacturer should 
know that he cannot afford. Still less can he 
afford to permit conditions to prevail in his 
works that cause ill health, for that injures all 
parties to industry. It pushes costs up, it pulls 
wages down; it enhances prices by diminishing 
both quality and quantity of output. Yet a re- 

159 



THE NEW IKDUSTKIAL DAY 

cent letter from a business friend draws atten- 
tion to the fact that in many of our factories 
thousands of dollars are annually lost through 
unsanitary surroundings or poor lights. 

In a shop in one of our Middle States there 
were several deaths among the workmen within 
a short period. An officer of a trade union who 
was visting the plant, said to the proprietor that 
his operatives ought not to work with a gas-jet 
always burning close beside each man; that 
windows should be cut in a blank wall near and 
light and air be let in. The employer was at 
first indignant at the suggestion that he was in 
any way permitting conditions which caused ill 
health among his men, but in time took the ad- 
vice — cut the windows, saved the cost of the 
work in gas by the added light, saved also his 
men's health and increased the output. 

We often care for minor things and ignore 
larger ones. We put time clocks in our factories 
to record the coming and going of our men and 
we note whether they are a few minutes early 
or late, and this is well. But we are often 
thoughtless of the more important question — 
whether when they get there, they are in fit con- 
dition to do their work, and some of us are 

160 



THE EISE IN HUMAN VALUES 

careless whether the factory is so ordered that 
they can work at their best after they come. 
Sometimes operations which can be carried on 
without injury are from mere thoughtlessness so 
done as to be injurious. In a large New Eng- 
land mill two machines doing the same work 
were arranged opposite one another and the boy 
tending them stood between. It was necessary 
for him to turn half way around quite rapidly 
in feeding the machines. Examination showed 
that he was making sudden turns of his body 
twenty-two hundred and fifty times a day. A 
physician who examined the case advised that 
the effect of this sudden and continuous turn- 
ing might be very injurious — that it would cer- 
tainly injure some boys and was likely to in- 
jure any boy. 

Between the employer who allows condi- 
tions to prevail in his factory which dimin- 
ish the physical powers of his workmen and the 
employee who is habitually a little late there is 
not much to choose. Neither is free of fault, 
but the employer loses the more for the condi- 
tions he permits to exist affect a larger number. 
It is odd that we assume without thinking 
that a day's work for a man is a definite 

161 



THE NEW INDUSTRIAL DAY 

thing and that one hundred machinists or car- 
penters of similar experience and training are 
so much alike that we may properly expect from 
one that which another can do. We quite for- 
get the differences in health and vigor of these 
men or the effects of the environment in which 
they live. If one of them enters the works 
scantily fed or having eaten ill-cooked food, he 
can hardly work with the same energy as 
the man whose wife has provided him with a 
good breakfast. There was an old Jewish 
proverb which ran — " If Israel would repent for 
but one day the millennium would immediately 
come." If all the workmen in America were for 
a single month healthy and strong, were well 
fed, were working under sanitary conditions 
with good tools and light, without false motions, 
with proper materials, the result in the quantity 
and quality of their product and in its low cost 
would be a revelation. 

We take great care of race horses because suc- 
cess depends on their health and their ability to 
endure strain. In the race of modern commerce 
the same is true of men and the interests at stake 
are such as make it vital that the human factor 
in our industries shall be fit. Some far-sighted 

162 



THE EISE m HUMAN VALUES 

employers, having seen that it is profitable so 
to do, have led the way in caring for their opera- 
tives and the contagion of their example is 
spreading. What is called " scientific manage- 
ment " aims to save waste of human effort in 
unnecessary motions. It is quite as important 
to save the loss to -workers and employers aris- 
ing from needless weakening of physical powers 
by causes which we know how to avoid. 

Nothing has been said about accidents for it 
is widely known how costly these are to all con- 
cerned. But in this phase of our industrial life, 
much yet remains to be done to save both loss 
and pain and there is ample room for search- 
ing thought. In a Western factory two stamp- 
ing presses stood side by side. On one there 
were no accidents — on the other accidents were 
rather frequent, yet the latter had the brighter 
light of the two. Indeed the sun shone directly 
upon this particular machine. A specialist was 
employed to find out why the machine which had 
the better light was that on which there were 
more accidents. After careful inquiry he said, 
" Do not let the sunlight shine upon that 
machine." They screened the machine from the 
light and the accidents ceased. The specialist 

163 



THE NEW INDUSTRIAL DAY 

reasoned that in certain well-known experiments 
in hypnotism attention was concentrated upon 
bright revolving mirrors which in time fas- 
cinated the observer and produced a degree of 
hypnotic effect. He thought that the bright 
pieces of tin passing rapidly and continuously 
under the eye of the operator at the machine on 
which the sun shone directly caused an effect 
not unlike that of the revolving mirrors, — or, in 
substance, that the eye of the workman followed 
so intently the rapid flashing movement of the 
bright tin pieces in the sun as to make him for- 
getful at moments of the necessity for care with 
his machine, and hence the accidents which, as 
has been said, ceased when the light was 
changed. 

Not merely in health alone are we coming to a 
right sense of human values. It is well to pro- 
vide healthful working conditions for the work- 
men we have, but it is quite as important to make 
good workmen out of the boys that are growing 
up. The mechanic with a sound body and skilled 
hands will be worth much more to himself and 
others if he has also a trained mind. The ap- 
preciation in our thought of the value of men 
is leading us naturally to deal with them as 

164 



THE EISE IN HUMAN" VALUES 

things of worth, and we are beginning to try not 
only to prolong their lives, but to make life 
better worth living. As we are grasping the fact 
of loss from preventable diseases, so we are com- 
ing to know the loss from the lack of vocational 
training. In a groping way we have a sense of 
the vast waste from unskilled effort. Every 
superintendent managing skilled labor knows 
how hard it is to get a sufficient number of com- 
petent workers. The demand for what are 
called first class men exists in almost every fac- 
tory and the supply is far from sufficient. This 
results in loss to the half-trained workman who 
is paid less than he would receive, if he were 
more skilled; in loss to the employer who does 
not get as good results from the cheaper work- 
man as would come from the more highly trained 
and better paid man, and in loss to the con- 
sumer also who always suffers when any eco- 
nomic process is inefficient. 

We are no longer satisfied with half-trained 
physicians. Engineers have to pass examina- 
tions for licenses, but manufacturers throughout 
the land have to be content with untaught men 
for there exists no sufficient means of teaching. 
If the young men in our country in large numbers 

165 



THE NEW INDUSTRIAL DAY 

sought instruction in manufacturing arts it 
would be found that there are not places in 
which they could all be taught. Our costly system 
of education is but little directed toward train- 
ing boys and girls to do well some particular 
kind of work. Young men in our machine shops 
learn the machinists' trade by picking up what 
they can in actual work at the bench or on a 
machine — making mistakes and learning by 
them, copying the methods of older men, finding 
now and then a mechanic who will teach them 
something, thus gradually gaining a sort of edu- 
cation by attrition. Ask mechanics of, say 
twenty years' experience, if they want their sons 
to pick up their trade in any such haphazard 
way as their fathers were obliged to use, and 
you will find that such men appreciate to the 
full the value of real vocational training. Many 
a shop foreman will tell you that it will be a 
happy day for him when he ceases to be a 
kindergartner and can look through his depart- 
ment seeing every place filled with men who do 
their work in the best way. We are running 
many industries now in which the workmen are 
acquiring shop-knowledge at poverty pay with 
a burden upon employer and superintendent that 

166 



THE RISE IN" HUMAN VALUES 

forms no normal part of the cost of operating 
the works. 

Let us look further briefly at this subject 
called vocational education to see what it means 
to the family, the factory and the public. It 
does not mean what is called manual training 
or teaching a little facility in some sort of work 
to a boy or girl. It is much more thorough than 
that. Many of our boys at fourteen are coming 
toward the point where self-support will soon 
be necessary, but they do not know w 7 hat to do 
nor have they been fitted to do anything. The 
world to them is a good deal of a haphazard 
chance. There seems no special place for them 
in it. They do know how to use either brains 
or hands to help themselves. They eagerly 
enter a school which offers them a year of pre- 
paratory study, looking toward their taking a 
man's place in the industrial world; which fol- 
lows that year by another in which they work 
half the time for wages in a regular factory and 
continue to study the other half of the time in 
school, with an opportunity for vacation work 
at pay if they wish it; and crowns this with a 
third year similarly divided but advanced; and 
at last turns them out mechanics trained in some 

167 



THE NEW INDUSTRIAL DAY 

definite industrial work, knowing the why and 
wherefore of it and equipped to take a man's 
place in the battle of life. The boy's parents 
gladly see their son thus trained because he be- 
comes an earner even while his education still 
progresses, and when his training is done is far 
better able to care for himself or for them than 
he would be without it. The boy thus equipped 
in mind and hand is a better citizen, a more 
productive industrial element, and a stronger 
man. 

Within the factory walls the boys thus taught 
work almost a revolution. No more does the 
foreman spend his time teaching the incompe- 
tent. No more is he forced to put up with a 
so-called " handy man " to do a mechanic's job. 
His force becomes one that not only knows, but 
knows why it knows. This force earns more pay 
but the wastes are less and the cost is less, since 
the output is greater or better or both. 

If the result of true vocational training were 
no more than has been said, it would often bring 
peace in the family and pleasantness in the fac- 
tory, but because whatever promotes the efiV 
ciency of the man and saves waste in the mill is 
reflected in the cost of goods, the public also 

168 



THE EISE m HUMAN VALUES 

profits. To give a thorough vocational training 
to its young people is a sound financial invest- 
ment on the part of the nation or state. Its 
normal outcome is a direct attack upon waste 
and upon high cost; it makes a saving in the 
expense of supervision, brings an advance in 
wages and in productiveness, causes a decrease 
in the relative burden charge upon each unit of 
industrial product, and finally and best of all 
creates a broader manhood, a better citizenship 
and enlarged opportunities. Such an invest- 
ment in human values is certain to bring pros- 
perity in its train. 

Even without the gain that is accruing from 
improving health and better training among our 
industrial workers, very much, can be done by 
treating the present human values in our in- 
dustries at their real worth. There is a manu- 
facturing company, now a prosperous leader in 
its field, that once had its " day of small things " 
when it had to struggle for its place in the 
world. It was then owned by two partners, 
both actively at work. The senior was in those 
early days content with plain brick walls and 
cheap second hand furniture in the office. His 
associate used to joke with him, claiming to 

169 



THE NEW INDUSTRIAL DAY 

have a more expensive outfit because the -junior 
partner's desk cost seven dollars and the other's 
but six. There were no rugs or carpets. Most 
of the clerical work was done by the two part- 
ners. But the senior had a keen sense of the 
value of men and all through those narrow years 
he paid good wages to the workmen in his shop. 
He used to say that nothing was so fundamental 
as a righteous wage, that upon such a wage al- 
most anything could be built with good manage- 
ment, and that without such a wage nothing, 
however good the management, could be con- 
structed that would stay. Years have since 
passed. Wealth has come. It is no longer neces- 
sary to use second hand furniture or to have 
bare brick walls, but the spirit of the senior part- 
ner is still alive and the righteous wage still 
prevails. Upon it a great industry has been 
built with much fine welfare work, and now men 
bring their sons into the factory to labor with 
them and seek for them the opportunities for 
advancement that there exist. 

Not long ago I had the pleasure of taking ex- 
President Roosevelt to this factory that he might 
see how such ideals work out in practice. He 
talked freely with a number of the workmen. 

170 



THE EISE m HUMAN" VALUES 

Most of those with whom he spoke had been 
there many years, some of them since the house 
began business. At last he met a man whom 
we will call Mack because that was not his name. 
" Mr. Mack," said Mr. Koosevelt, " how long 
have you been here?" 

" Ever since I was a boy, sir," was the reply. 

"How much did you get when you began?" 

" Five dollars a week, sir." 

"How much do you get now?" 

" Fifty dollars a week, sir." 

"Did you say fifteen?" 

" No, sir, I said fifty." 

This man had through long years of faithful 
service so earned promotion that at the time when 
this incident took place he was foreman of a 
large department, making a fine example of the 
possibilities open to an American workman 
under management which estimates human beings 
at their true worth. 

If we look back to the beginnings of things we 
see that the rise in human values has been great 
and that it is progressive. It is still going on. 
It is a plant of slow, strong growth having its 
roots deep in human nature and in economic 
truth. It does not advance by leaps and bounds 

171 



THE NEW INDUSTKIAL DAY 

nor shoot up like a weed in a night. It is not 
the gift of one man to another but is a righteous 
evolution out of the very heart of things. It can- 
not be dragged upward with a rush as the re- 
sult of administrative acts or political policy but 
must advance with steady and stately step with 
the increasing comprehension of economic sci- 
ence and the keener appreciation of the true re- 
lation between man and man. 



172 



CHAPTER VIII 

THE SCIENTIFIC SPIRIT IN MANAGEMENT 

XTOT long ago, I stood with a factory manager 
•^ of thirty years' experience in the shop of 
which he has charge. It was a prosperous shop. 
Evidences of intelligent work were on every hand. 
But the manager was not content. He had spent 
years studying his own works and had made 
changes here and filled in weak spots there. His 
costs were going down and his output going up, 
but he was not satisfied. He took me about to 
show that this machine must make way for one 
better suited to the present work, that these 
must be shifted to give space for free movement, 
and that the heavy machinery must be moved to 
save handling materials. 

Here a new place was made for " laying out " ; 
here tools brought nearer to the point of use ; here 
a new machine or fixture was being tried; here 
a better design of output was being made. 
Everywhere his searching eyes looked to see 
what could be bettered. He was under no illu- 

173 



THE NEW INDUSTKIAL DAY 

sions. No false pride in his own works blinded 
him. 

He was not controlled by what others were 
doing, nor following traditions. His keen pro- 
fessional mind was at work probing his own 
weaknesses. The owners and customers of that 
factory are in safe hands. 

As one looks at our industries, a curious in- 
equality of standards appears. Much of the 
work is on a really scientific basis. The appli- 
cation of mechanical, electrical, metallurgical 
and kindred sciences has been general. A 
science of costs is growing up and is develop- 
ing a literature. The art of testing materials 
and of adapting them to special uses is widely 
applied. The science of accounting is well 
established. But there is not yet a science of 
management. 

And yet, if a science ever were needed, mean- 
ing definite principles based on exact knowledge 
of facts, it is in this very matter. 

There is no uniformity in principles of man- 
agement, even in the same industry and rela- 
tively little has been done to develop standard 
practice. It is not proposed, nor is it desirable, 
to diminish the initiative of factory managers, 

174 



THE SCIENTIFIC SPIRIT IN" MANAGEMENT 

but as the study of mechanical science has 
helped, not hindered the individuality of the 
mechanic, so a manager would be aided rather 
than restrained, were the broad principles of a 
science of managing so made clear as to find 
general acceptance. 

The scientific spirit is always that which seeks 
to learn all the facts on any one subject and 
when they are found strives to formulate laws 
based on the facts and to put these laws into 
operation. It is a mark of the truly scientific 
spirit that it is impatient with those who as- 
sume a truth from a part only of the facts; or 
who initiate practice without that thorough 
comprehension of the laws of the subject which 
can only be had when all the facts are known 
and their relations determined. The advocates 
of what is now popularly called " Scientific 
Management " assert that they aim to learn the 
truth concerning factory production in all its 
varied phases and to base upon such study a 
practical system of standard industrial opera- 
tion. 

To this end they inquire into the smallest de- 
tails of shop operation and try to lay down prin- 
ciples of general application. The value of this 

175 



THE NEW INDUSTRIAL DAY 

newcomer among the sciences, if it be such, must 
be justly weighed in forming a sound judgment 
about it. It will not do to pick out a particular 
phase here and there and without relating it to 
the whole of which it forms a part, criticize it 
as if it stood alone. Nor is it fair to carp at 
some statement of its advocates as if it, sepa- 
rated from its context, could be treated as 
alone and complete. What is called " scientific 
management " has met with attacks of this kind 
which serve, however, chiefly to show that all 
the facts concerning it may not have been 
known, or if known may, in part at least, have 
been misunderstood. 

Disclaiming attachment to any particular sys- 
tem or exponent of efficiency, the following ele- 
ments may be said to be clear in all that is pro- 
posed in behalf of the alleged new industrial 
gospel : 

Close cooperation and sympathy between the 
management and the workmen. This is foremost 
and basic. If it is not realized that this is fore- 
most and basic, the subject is completely misap- 
prehended. 

The standardization of equipment and acces- 
sories throughout the shop. 

176 



THE SCIENTIFIC SPIRIT IN MANAGEMENT 

The systematizing of work in operation, of the 
care, maintenance and issue of materials and 
tools, and the careful routing of all orders while 
passing through the works. 

The planning in advance of the work for each 
machine and furnishing tools, fixtures and ma- 
terials ready to the hand of the workman before 
needed, so that delays between operations are cut 
out. 

The study of the actual time occupied by each, 
element or movement of every operation, in order 
to determine the correct time required for it and 
to save waste energy. 

The determination in time study of the proper 
allowance for rest, necessary delays or interrup- 
tions of work. 

The fixing of standard time for doing work, 
based upon the aforesaid studies, and the care- 
ful personal instruction of workmen in the best 
and easiest methods of working. 

The payment usually to the workman of a 
bonus or premium, based upon his doing the 
work in a certain relation to the standard time. 
It is said to be common to arrange for an in- 
creased pay of from thirty-five to fifty per cent, 
based upon a saving of time. 

177 



THE NEW INDUSTRIAL DAY 

The above analysis is not, and is not meant 
to be, exact. It is a general statement in popu- 
lar language of the broad facts. Any system 
must be flexible, must provide for the local con- 
ditions existing in each shop, and must suit it- 
self to them. The spirit of the whole thing is 
cooperation. Where this is absent, there is not 
present what is called " scientific management. " 
All the blanks and forms and rules in the world 
will not make good the want of the spirit of 
mutual helpfulness, which is fundamental. On 
the other hand, where the spirit of sympathy 
and cooperation is active in a shop, there " sci- 
entific management " is present in its essential 
form, even if the rules and methods for the pres- 
ent go little further. 

It may be said, and truly, that in the suggested 
principles there is little or nothing new. This 
is admitted by the advocates of the new methods. 
But the grouping of these into a whole, with 
definite relations and establishing them all on 
a basis of mutual good will, is still so new as to 
be unfamiliar even to many progressive men, and 
is still outside the knowledge of some critics. 

It is my conviction that it is contrary to the 
very spirit of efficiency to establish any sys- 

178 



THE SCIENTIFIC SPIEIT IN MANAGEMENT 

tern of the kind by fiat upon an unwilling or 
even upon an uninformed working force. One 
improvement takes place, let us say, in a stock- 
room, then a change in routing is made; a shift 
of machines follows, and so on. In a large 
works it may take, indeed should take, several 
years at least to get it all in operation, even if in 
its entirety it is ever used alike in any two estab- 
lishments. Probably the result will be that pro- 
gressive managers will adopt features here and 
there from the various systems, will fit them to 
the methods already used and let the whole 
thing develop normally. 

This is the proper and sensible way. The chief 
thing is to get the spirit of mutual confidence 
and support in full control, and then it is not 
so very material what form the movements to 
follow take. 

But one thing, by common consent, must be 
speedily done. The waste of time, materials and 
effort in our shops must be stopped. The fric- 
tion arising between employers and workmen, 
often from trivial causes and misunderstandings, 
must be done away. 

Whatever, in a spirit of candid helpfulness, 
tends to this and to advance wages and increase 

179 



THE NEW INDUSTRIAL DAY 

product under just and equitable conditions 
should and will have a fair trial. The good in 
it will be retained, the evil, if any, rejected, and 
the world will have moved another step forward. 

The great export movement which within a 
few years has altered the face of American com- 
merce is the outward and visible sign of an in- 
ward growth in better methods of production. 
It is the result of progress toward that industrial 
freedom arising from self-help which contains 
the solution of many of our social and labor 
problems. Even a hasty glance over the manu- 
facturing field shows that those of our industries 
that have succeeded in the world's arena are also 
those that on the whole pay high average wages, 
and whose operatives work under the best con- 
ditions for health and for large output. 

Conversely it will appear on study that the 
industries, which do the least in the foreign field 
include those paying the lowest relative wages, 
and whose working force often operate under 
less favorable conditions of equipment and sani- 
tation. 

In the hearing before the Congressional Com- 
mittee of the 62d Congress on Scientific Manage- 
ment in the government industries, two striking 

180 



THE SCIENTIFIC SPIEIT IN MANAGEMENT 

things took place. One was the testimony under 
oath of experienced manufacturers in different 
lines that the cost of production was cheapest 
where men were highly paid and provided with 
the best tools and working conditions. The 
other was the consistent testimony of trained ob- 
servers that keen self-criticism was at once the 
first duty and the most profitable privilege of 
every manufacturer. 

Within these conservative statements made in 
the quiet of a committee room at the New York 
Chamber of Commerce lies the germ of a social 
and industrial revolution. 

If American manufacturers grasp and act 
upon the truth to which their fellows have sworn, 
the results upon them, upon their workmen and 
upon all consumers can hardly be measured. It 
means more profit for the first, higher wages 
with less effort in fewer hours for the second, 
and lower prices for the third. 

It is strange that a people of such energy and 
resourcefulness as we are should have been so 
long content to think ourselves unable to com- 
pete on even terms with others, and should have 
held so long to the superficial and worn-out the- 
ory that the rate of wage we pay is the chief 

181 



THE NEW INDUSTKIAL DAY 

and controlling element in the cost of our goods, 
making them so expensive that they cannot be 
sold at a profit against foreign makers on even 
terms in our own country, much less in Europe 
itself. 

But strongly as some of our industries still in- 
sist that their low wages must go still lower 
if they are to meet Europe on an equal basis of 
cost, other manufacturers have learned better. 
From West Virginia, a concern making glass- 
ware writes that its largest sales are in London 
and Germany, and it finds it wise to pay higher 
wages to produce goods for those competing 
markets. 

In the same industry another company runs 
on such a basis that recently one of its workmen 
was earning eleven dollars per day while an- 
other earned but eight. What was the attitude 
of the management toward these men and their 
wages? Was it that if the man earning eleven 
dollars could be made to turn out the same prod- 
uct for half that sum the concern would profit 
thereby? Hardly! The course taken was to re- 
tain an efficiency engineer to show the manager 
how the product of the eight dollar man could be 
so increased by instruction and by creating right 

182 



THE SCIENTIFIC SPIRIT IN MANAGEMENT 

conditions that lie could, without overstrain, 
bring his productiveness up to a point where he 
also would receive eleven dollars. 

This manufacturer had grasped the truth that 
close and sympathetic cooperation between his 
men and himself was profitable to both, and 
a wise regard for his cost sheets, and an enlight- 
ened selfishness, both warned him that the policy 
of crowding the workmen to the largest product 
at the lowest wages did not pay. 

Our industrial managers are divided into two 
camps, the fearless and the fearful, those who 
face the light and those who look to the past, 
those with open and those with closed minds, 
those who think they know and those who seek 
to know. The testimony before the Congres- 
sional Committee brought out distinctly also the 
fact that the effort for a keen study of fac- 
tory conditions and a higher wage, based upon 
a greater product more easily and more cheaply 
made, meets its greatest resistance from mill 
owners and managers who call themselves con- 
servative. 

One is curious to know what men think they 
conserve when they say, as some do, that they 
can only face greater competition by reducing 

183 



THE NEW INDUSTRIAL DAY 

the wages of employees already paid an average 
of |8.50 weekly. Indeed, so "left to them- 
selves " are some manufacturers of this type that 
one of them deliberately worked his operatives 
into a position where they could not resist a cut 
in their wages, and when the foolish manager 
ordered the cut made, he said to his deluded self 
that he had saved f 65,000 per year by it. 

Another manager stated that on one article he 
had cut his piecework rate five times. 
He not only thought this wise, but said 
his workmen had obviously been "soldier- 
ing" since at the former higher rates they 
had not turned out as large a product as 
when driven by necessity after the rate was cut. 
Under management of this kind conditions often 
exist from which spring indirect losses many 
times greater than the supposed saving in the 
pay roll arising from a cut in wages. But to 
these losses such managers are blind. 

It was stated in October, 1911 at the Dart- 
mouth Conference on Scientific Managementjthat 
in one large mill the waste of money was such 
that a saving of $1000 daily was possible, with- 
out touching wages, by the use of well-known 
efficiency methods. But the managers were so 

184 



THE SCIENTIFIC SPIEIT IN MANAGEMENT 

wedded to their own ways that the opportunity 
to make these economies was refused. 

In company with a friend of wide experience 
in such matters I visited a large establishment 
in the East whose proprietor took pride in his 
extensive plant, and, indeed, with just cause, for 
many conditions there were ideal. There was 
fine light, abounding fresh air, and skilful ar- 
rangement of fine machinery. Yet a large part 
of the productive portion of the plant was on 
the average producing but two-thirds of its 
capacity, and the labor cost in the product was 
very much more than that of other concerns in 
similar lines. 

Our host was in many ways as thorough as he 
was courteous, but he was controlled by the be- 
lief in himself natural to a strong man, and im- 
pressed upon us again and again the fact that 
he " knew his own business." Yet work went on 
by hand which was elsewhere done by machinery, 
and expense was put on some operations that a 
man who was a thorough self-critic would have 
found means to save. 

Into the office of a large factory in New York 
state went one day a competitor of the concern 
who thought it courteous to call upon his rival. 

185 



THE NEW IKDUSTEIAL DAY 

He was cordially received by the unassuming 
owner, and finding the atmosphere congenial, be- 
gan to talk on matters of mutual interest. Be- 
ing asked whether he had not secured a certain 
order, he answered in the affirmative, saying that 
that work was a specialty with him and that he 
had been able to reduce the cost for material and 
labor to about eighteen cents each piece. His 
host said that he had not himself given any 
special study to that particular article, and that 
he was very glad to have suggestions. 

When the visitor left, the owner crossed the 
room to his cost-keeper whose eye he had seen 
twinkling and asked him what the last lot of 
those goods cost for labor and material, and was 
told six cents each. The trouble with the visitor 
was that he had no realizing sense of his own 
heavy burden charges, and ignoring them and 
forgetting selling cost he had underbid the man 
whose actual outlay was but one-third his own. 
This is but one of many possible illustrations 
showing that the man who " knows his own busi- 
ness " is often ill informed about important fac- 
tors in it. 

Whenever one meets industrial managers who 
are sure of their own knowledge and wisdom, — 

186 



THE SCIENTIFIC SPIRIT IN MANAGEMENT 

and there are such true industrial Bourbons in 
our country — who roll the word " conservative " 
under their tongues with sweet self-satisfaction, 
one has that sinking feeling common to those 
who try to enlighten hopeless ignorance. The 
really wise are not so sure of themselves. 

But we emphasize that the scientific spirit in 
management seeks "the whole truth and noth- 
ing but the truth." It is not content to stop its 
inquiry with the money cost of output in wages 
and material nor with the financial side of profit 
and loss. It has a keen eye for the human or 
social gain and for the physical or moral loss 
involved in factory operations. We must not 
only conserve in every way the health and vigor 
of labor, but also provide that it may work 
out its own happiness with wages that will en- 
able it to live so as to maintain its self-respect and 
with sufficient leisure to enjoy and profit by 
mental and moral recreation. 

The attitude of many employers towards the 
demands for shorter working hours has been far 
from that of a judicial spirit of searching in- 
quiry into all the facts. It rather has been a 
cry of alarm, a call to resistance as against some 
iniquity about to be perpetrated. In a super- 

187 



THE NEW INDTISTKIAL DAY 

ficial way loss is assumed from an eight hour 
working day almost without any calm study of 
the subject. 

I recall that in a New England city, famous 
for its municipal statistics, appeared the state- 
ment that three hundred per cent, of its Turkish 
population was criminal. A student, whose at- 
tention this fact aroused, investigated it and 
found that the Turkish population consisted of 
one Turk who had been locked up three times. 

This is quite typical of the one-sided way in 
which statements are made about the eight-hour 
day. Associations of manufacturers cry out 
against it but their cries are as incoherent as 
they are loud. Abuse is showered on the labor 
organizations that promote the shorter day, but 
how little there really is of thoughtful study into 
all the phases of the problem. Yet we all know 
that hours of labor have been growing shorter 
for years, not only without hurt to all concerned, 
but to their actual gain. Men worked fourteen 
hours daily not long ago. Then it became 
twelve, then ten (but there was great outcry 
about it). Then nine hours became the rule in 
many a factory, and the nine-hour day has paid. 
Where men with open minds have applied brains 

188 



THE SCIENTIFIC SPIRIT IN MANAGEMENT 

to the problem, they are doing better in nine 
hours than they did in ten. They make as many 
or more goods and they cost less. Nor is the 
eight-hour day a new untried thing in industry. 
The great Zeiss work in Jena, Germany, intro- 
duced it and kept careful record of the results. 
At the end of four years it was found that the 
hours worked had decreased fifteen per cent, but 
the output per hour had increased over sixteen 
per cent. The well-known makers of textile 
machinery, Mather and Piatt of Manchester, 
England, substituted the eight-hour day for a 
nine-hour day with entire success. Several of 
our railways have voluntarily placed some of 
their services upon an eight-hour basis. 

The truth is that in this eight-hour matter we 
manufacturers are inclined, to use a homely 
phrase, "to squeal before we are hurt." For 
there are many phases of the subject we rarely 
discuss. How much do we really know about 
the effects of fatigue on production, especially as 
to its cumulative results? We were certain the 
nine-hour day meant loss as compared with ten 
hours, but it has not proved so where we have 
used our wits as we ought. Have we not been 
looking too much to rules of addition and sub- 

189 



THE NEW INDUSTRIAL DAY 

traction and too little to the physical and mental 
laws of human nature? A lot of money has been 
spent in delegations and conventions to resist the 
eight-hour day. It has escaped me if there has 
been any large outlay for a dispassionate study 
of the subject on all its varied sides. But 
whether it be more or less profitable financially 
is not after all the crux of the question. If the 
eight-hour day be humanly more profitable, it 
will come and may God speed it! Nor will it 
be found that what is best for humanity is con- 
trary to economic law. There are no real 
antagonisms between truths. 

It is useless to resist the laws of growth, but 
we need not reform rashly nor attempt to ac- 
complish our work with an ax. That is to jump 
to the opposite extreme. The human force whose 
essence is growth (since it is a living force) 
must resent being held in narrow and rigid 
bonds. The vigor of its protest against hard 
conditions is normal. Labor cannot be content 
if it would and ought not to be content if it 
could with things as they are. It is of its very 
nature to climb upward. Growth, it has been 
well said, is impossible in industry without 
profits; it has been clearly demonstrated that 

190 



THE SCIENTIFIC SPIRIT IN MANAGEMENT 

profits cannot be permanent without growth. 

We may as well face here one very common 
occasion for complaint among employers. Work- 
men and workwomen too, say some, are ungrate- 
ful. They do not appreciate what is done for 
them. When I hear this plaint I ask myself 
such questions as: how was it done for them? 
Why was it done? What was left undone? 
There is, one suspects, about as much human na- 
ture on the average in one person as in another. 
The owner, the foreman, the workman have points 
of strength and weaknesses in common. Did 
you make a gift to your workmen? They do not 
want gifts. Do you show them a charitable dis- 
position? They resent it and ought to do so. 
Do you impose your ideals upon them? They 
want to live their own lives in their own way 
and are right. But candor, manliness, just deal- 
ing, courtesy, the spirit of a " square deal " — are 
these wasted? Not if thirty years have taught 
me anything. 

I talked not long ago with an experienced 
builder who said, " I have been over forty years 
in active business as a contractor with never a 
strike." 

I asked, " How did you do that? " 
191 



THE NEW INDUSTKIAL DAY 

" Just by treating my men on the level. I al- 
ways tried to remember I was one of them my- 
self." 

A prominent labor leader in whose judgment 
I have much confidence said to me that there 
were two kinds of places where they found it dif- 
ficult to organize the workmen. One was where 
the men were so harshly treated as to be cowed. 
The other was where they were so well treated 
as to be content. I can recall a factory where 
for over twenty years there has been no breath 
of dispute. Doubtless there are many cases 
where welfare work well done has failed to keep 
the peace, but in many, if not most, of these 
cases the seeds of failure were sown in the be- 
ginning or other conditions existed which nulli- 
fied the good the employers sought to do. Work- 
men will say that " one swallow does not make 
a summer" and that flower gardens do not al- 
ways pay wages. A share in a possible profit 
does not make good a cut in the piecework rate 
and " the boss " does not always know what goes 
on in the shop. 



192 



CHAPTER IX 

"the new industrial day" 

TT is hard to realize in the ample spaces and 
broad areas of our land that there are dark 
industrial places, that men and women, and chil- 
dren also, are confined in foul spots and driven 
through long hours at pitiful pay for the means 
not so much of living as of existence. While 
thinking of the themes on which it has been 
my privilege to speak in earlier pages, there has 
come to me the recollection of the many neat, 
small houses that are so marked a feature of 
some of our factory towns, and of the airy, well 
lighted shops that are springing up in many 
places; and it seems as if these are the promise 
of the dawn of a New Industrial Day. 

It is not my thought to advocate any sudden 
or radical change in method or action. I believe 
in evolution, slow, steady, patient, progressive, 
not in revolution which turns things quickly up- 
side down. This is a case for the application of 

193 



THE NEW INDUSTRIAL DAY 

the Scripture phrase : " Come, let us reason to- 
gether." More than anything else I dread in 
what should be a sober, serious weighing of facts 
and search for truth, the entrance of impatience 
or of prejudice, those twin enemies of calm judg- 
ment. 

Let us enter in spirit one of our great facto- 
ries and spend perhaps an hour there. We may 
hope that during that time we shall be unlike 
those of old of whom it was said that they saw 
but did not perceive; for our purpose in going 
into the works will be to look closely into what 
may be seen there and to think as carefully as 
we can about what we shall see. 

At entering we see that the building was de- 
signed for its use and the primary essentials of 
space, light and air have been given thought. 
In the older day which is closing, the workmen 
were furnished large drafts of carbon dioxide 
to consume with the other materials placed at 
their disposal and there was not always apprecia- 
tion of the fact that light had a relation to the 
human eye, but in our present factory these 
things are changed. The building, also, has been 
so designed that the flow of work through it is 
continuous, for industrially we have learned the 

194 



"THE NEW INDUSTRIAL DAY" 

force of the old Koman maxim — " Not a step 
backward." The machines are grouped each ac- 
cording to its kind, like the animals in Noah's 
Ark. There used to be a cheerful distribution 
of these things, as if a lathe were not comfort- 
able unless a shaper and miller were side by side 
with it, or a planer were married to a drill press. 
But we have divorced them now and we group 
three or four or ten of a kind, each in its order 
for the proper routing of the work as it passes 
through the shop. We go even into the details 
of these groups and so relate the machines, one 
to another, at different angles that they may be 
properly fed without trespassing on space, and 
we put racks beneath them so that an abundance 
of material may be piled at hand to avoid loss of 
time by needless steps when new stock is needed 
for the automatic machinery. All through, the 
whole machine equipment shows the evidence of 
study how each unit shall not only be fitted to 
its task and be given the best conditions in which, 
to perform that task, but each shall be so related 
to its fellow-unit that the task of the fellow shall 
not be hindered but helped. 

And since these buildings and machines are 
meant for production and are all of them useless 

195 



THE NEW INDUSTKIAL DAY 

waste unless they produce, and are none of them 
sources of profit unless they produce efficiently, 
we look into certain other details that bear upon 
these factors. We have discovered, for example, 
that a belt running on the old tight and loose 
pulley is always under tension, and even when 
running on the loose pulley is wearing itself 
away. We have taken up a form of counter- 
shaft in which the loose pulley is slightly 
smaller than the tight pulley so that the belt 
runs free of tension when not working, with 
a slight conical section on the loose pulley to 
bring it easily into place when its services are re- 
quired. We have found that the matter of 
getting the power to our machines is worthy 
of our thought, and in the factory we are visit- 
ing some machines are directly motor driven, 
others so driven in groups, others connected up 
in sections, each according to what study has 
shown to be normal to its best productivity. We 
find also that a "tickler" of belts is kept for 
study which has shown that belts at a certain 
age and in certain uses have a definite life, 
and that when they have become so old it 
is necessary to watch lest by some sudden 
breakage they stop a valuable machine. So each 

196 



"THE NEW INDUSTRIAL DAY" 

belt in the shop is no longer under general but 
under particular supervision, the time when it 
may be expected to show wear being known when 
the belt is put in service new. And our belt men 
work in the noon hour and after hours for it is 
good form to watch the belts so that repairs are 
made before wear goes too far. We find also 
that we have gone into what seem small details 
in other ways. The shop we are in does not 
make its vise benches of heavy hardwood plank, 
for these warp and when they wear in spots it is 
needful to replace more sometimes than is worn. 
This shop has made its benches of heavy soft- 
wood plank and on the top of them puts cross- 
wise thin and narrow matched strips of hard- 
wood, any two or three of which when worn can 
be replaced without disturbing others or inter- 
rupting work. 

It would be possible to continue our factory 
inspection into other details but enough has been 
done for our purpose and we will go for a mo- 
ment into the tool and stock rooms. In the for- 
mer, not only is care taken that tools, as they 
come back from use, are sharpened or repaired 
so that there may be no question of their readi- 
ness for service when they are reissued, but to 

197 



THE NEW IKDUSTKIAL DAY 

save what seems a small detail in records we 
indicate the number of tools or fittings that any- 
one workman has by the shape of his brass check 
hung upon the hook. In the stock room is kept 
a running inventory on slips attached to every 
bin so that the question as to how many there 
are of any item in the assorted stock never 
arises, and not only so, but there is provided an 
inward and an outward bin for each item of 
stock, and sometimes a third one maintained at a 
fixed quantity to save questions. 

From this atmosphere of precision we walk 
back to the shop office. The superintendent tells 
us that the material bought has been selected as 
the result of long evolution as to its chemical 
and metallurgical contents, its shape and size, 
and that frequent examination by physical and 
other tests is made to insure its being perfect in 
all these respects, while at the same time con- 
stant experimenting progresses to determine 
whether there is made, or can be made, something 
better suited to the duty or something at a lower 
price as well suited thereto. And as we sit down 
in his pleasant room, the superintendent goes on 
to say that he has reached the point on some ma- 
chinery where he secures ninety-six per cent, 

198 



"THE NEW INDUSTRIAL DAY" 

operating time and that he is studying how to 
bring his lathes above the eighty per cent, of 
efficient time which is what they at the moment 
represent. 

I have dwelt thus long, and yet very inade- 
quately, upon certain details of certain phases of 
a modern shop in order to concentrate on a 
single broad truth underlying all that has been 
said. This is that in our buildings or machines 
or various equipment and in our material, the 
most exacting study has been used to fit each 
for the purpose for which it is intended. We 
have spent, or others have spent in our behalf, 
years of patient experimenting and sums that 
thousands will not represent, to determine how 
best to adapt all these various elements to one 
another so that their relations shall be harmo- 
nious, productive, efficient and economical. By 
economy we have not meant the absence of spend- 
ing, for these machines and these methods have 
cost much through many years, but we regard it 
as well spent. As between the man who offers a 
machine as a cheap tool and another who asks a 
greater price, we think first of the question, 
"What will these tools do?" and it is the rela- 
tion of their productiveness to their cost that 

199 



THE NEW INDUSTEIAL DAY 

guides our decision. Let us suppose that, in the 
shop we have just visited in our thought, the 
present modern equipment were replaced with 
another of similar kind but selected chiefly be- 
cause it was cheaper in its first cost. The result 
would be disastrous, for, as regards machines, it 
has been clearly demonstrated that productive- 
ness is more important than first price. 

One more look into that shop before we change 
our theme. The material in the stock room, the 
carefully designed tools in the tool room, the ma- 
chines selected and installed with equal care, 
these are all dead things. Turn on the power 
and the light and if that be all that is done such 
action as results is more likely to be disastrous 
than effective. They will follow the laws of their 
mechanical nature and wreck themselves unless 
the conditions for useful work are provided. 
There are few places more dreary than a great 
shop alone with its dead equipment; like a 
steamer in mid-ocean when the engines stop, there 
is a sense of the absence of life. Let us look 
along the lines of polished machinery and upon 
cessories, and think for a moment of the next 
the piles of ready material, and on the varied ac- 
step. Is there to be an end at this point of the 

200 



"THE NEW INDUSTRIAL DAY" 

study and the patient care that has guided us so 
far? Is the process of economical investment 
based upon production to be changed just at this 
point? Having the best equipment bought and 
arranged with its cost as a secondary factor and 
its productiveness as the primary factor, shall 
we put at these machines men whose cost is first 
to be considered and whose productiveness we 
aim to extract by a process called " shop disci- 
pline"? Having with great care fitted tool to 
mechanism, shall we, or shall we not, use equal 
care to fit the men to both? Having utilized the 
laws of light and of power and of mechanics to 
the full, intelligently and carefully, shall we, or 
shall we not, now utilize the laws of human na- 
ture to the full with the same intelligence and 
care? Shall we recognize that at the point 
where our thought is halting, we are passing over 
from the inert to the responsive and that in ad- 
dition to all the other laws and conditions under 
which we have so carefully worked hitherto there 
has come into play a new law now, the law of 
life and growth and thought? 

Here we touch the very core of our subject and 
upon the way in which we deal with it, shall it 
be known whether we are of the light or of the 

201 



THE NEW INDUSTKIAL DAY 

darkness, for our fine equipment with its per- 
fectly balanced relations may mean after all that 
we have learned but the smallest part of our sub- 
ject, and that the full light of day has not yet 
dawned on us. I do not here urge details of 
dealing with men any more than details of the 
tools and materials we see, but I do urge that as 
the laws of nature are utilized by us all after 
keen inquiry into them in the mechanical and ma- 
terial side of our work, so the laws of human 
nature shall be given at least as keen study in 
the living and productive side of our work. For 
since both the laws of mechanics and the laws of 
human nature are but a partial manifestation 
in my thought of the Law of God, there can be 
no harmony and no basis for permanent peace 
and for the highest production until we have 
re-adjusted our factories so that they operate in 
accordance with the laws of human nature. Is 
a man doing the best he can when he runs his 
machine tool well? Perhaps, and perhaps not. 
In a large Eastern shop recently a young me- 
chanic at a fine turret lathe was producing cer- 
tain work at low cost while earning high pay. 
The element of labor cost was so small in his 
product that the Cost Department had to use a 

202 



"THE NEW INDUSTRIAL DAY" 

microscope to find it. This was good, but was 
it all the good there was to be had from the man? 
As we talked with him he spoke with a smile of 
having earned fifty dollars extra the week pre- 
vious for an improvement of which he had 
thought while his turret lathe was working. He 
reflected upon it, and knowing that his employer 
was a man of broad and just spirit, he had, after 
working his thought out carefully as he stood by 
his machine, gone to his employer with his idea. 
The employer had not only thanked him and 
given him demonstration of his good will by lib- 
eral wages, but had handed him fifty dollars be- 
sides. Thoughtful men need not be told that the 
narrowness and harshness which is concealed 
sometimes behind the words " practical " and 
" hard-headed " would have prevented such ideas 
from ever being conveyed to the owner of a shop 
run on those lines. 

I recall one day being asked to look at a run- 
ning machine and having the workman say to 
me, " If this tool can be adjusted in such a way, 
I can do twice as much." Does anyone suppose 
that stern and narrow discipline would have 
brought that doubling of product? In this en- 
lightened day it may perhaps be doubted whether 

203 



THE NEW IKDTJSTKIAL DAY 

and to what extent there exists such shortness of 
vision and narrowness of outlook as that of which 
I have spoken, but it was a matter of sworn tes- 
timony before me but a few weeks ago that in a 
large shop a mechanic, whose record was good, 
was kept at home three days by the death and 
funeral of his son. When at the end of that 
time he returned to his work, he not only lost the 
three days' pay but his absence was counted 
against his efficiency record and so altered that 
record as to cost him twenty-five cents a day for 
the following half year, and his explanation, 
though admittedly true, was not received be- 
cause discipline had to be maintained. 

It was true also in another case where a man 
was quarantined in his home by the authorities 
because of scarlet fever that, when he returned 
to work at the end of a fortnight, he lost not only 
his wages for the time of absence, but was de- 
moted on his efficiency record because of the ab- 
sence so that he lost twenty-five cents daily for 
six months to follow, even though his explana- 
tion was admittedly correct. It seems strange 
that those who so carefully adjust themselves to 
one part of nature's laws in their plants should 
be so hopelessly ignorant of another part of those 

204 



"THE NEW INDUSTEIAL DAY" 

same laws, when they come to deal with men. Is 
there anyone who wonders that the two cases I 
have mentioned so rankled in the minds of the 
hundreds of workmen in that factory as ulti- 
mately to cause annoyance and expense to the 
management, outweighing many fold the pitifully 
small questions of wages involved? 

Let us look briefly at the situation in the tex- 
tile mills at Lawrence, and get at some facts con- 
cealed by the dust of conflict there. The mills 
had some time ago accepted a reduction of their 
working time from fifty-eight to fifty-six hours 
without change of pay, and a recent legislature 
reduced the time for the women and children in 
those mills to fifty-four hours weekly. This re- 
quired shutting down the mills two hours each 
week because they were so balanced that the 
men could not work in some departments unless 
the women worked in others. The difference in 
time was two-fifty-sixths, a fraction less than 
four per cent., and the mills decided (observe, 
not all mills upon whom this bore, but some of 
them, those in this one city) they decided, I 
say, that this percentage must be deducted from 
the wages of their people. Those wages were al- 
ready far below the average American wage. A 

205 



THE NEW INDUSTRIAL DAY 

rate of six dollars and fifty cents weekly would 
represent the average woman's earnings before 
the cut was made. A strike ensued and by that 
strike has been lost many times over a year's dif- 
ference in wage. Apart from this money loss 
there has come with it the ill will and distrust 
of thousands of operatives, and now, after the 
distrust has been gained and the loss has been in- 
curred, the mills concede an advance wage scale 
about one-half larger than the cut which they 
made at first. So by their own action they have 
shown that despite the loss from weeks of idle- 
ness, they can pay an advance and that the for- 
mer deduction was made, to say the best, in igno- 
rance, for if made with knowledge, it approached 
the criminal. I do not mean in any degree to 
approve the excesses of the strikers, any more 
than I mean to approve excesses, so far as they 
may have existed, on the part of the authorities. 
I simply mean to detach these excesses on either 
part and to consider the fundamentals of man- 
agement and their results. The mills are now 
paying more wages than before the strike and 
paying them to a force resentful of injustice, for 
the most ignorant man knows that if the mill 
can advance his wages five per cent, after the 

206 



"THE NEW INDUSTRIAL DAY" 

loss they have suffered, the original cut of less 
than four per cent, was a shameful thing. 

Of late, and with just cause, there has been 
universal outcry against the excesses to which 
some men, claiming to represent labor, have gone 
and there is a certain danger that injustice may 
be done as a result of this righteous wrath. 
Crime is horrible and always to be condemned, 
and murder is not to be condoned ; but there are 
crimes against human nature that are not within 
the scope of the statute law, and the revolt of 
human nature against them has as sound a basis 
as our proper outcry against the more overt crim- 
inal act. If greed kills through sweating and 
child labor, it is not less murderous, only less 
rapid and less merciful, than he who stabs to 
slay. With the men that enter our factories, en- 
ters the greatest force in all production ; I mean 
the responsiveness of those men to leadership. 
They work indeed because they needs must earn 
their bread, and it is needful that supervision 
should be closely exercised for manifest reasons, 
but neither the need for bread nor the closest 
supervision will draw out the best that the work- 
man has to give. That can only be done by the 
righteous adjustment of wage to product ; by the 

207 



THE NEW INDTTSTEIAL DAY 

absence alike of injustice and of charity ; by the 
opening of the door of opportunity ; by the ab- 
sence of driving and the presence of leading; by 
the selection of the man for the task and the ad- 
justment of the task to the man ; by the instruc- 
tion of the man in his task or if unfitted for it, 
then in some other task for which he is more 
fitted; by the spirit of candor and frankness be- 
tween the employer and the worker ; by the will- 
ingness to hear and to wait; by the closest pos- 
sible touch practicable in great factories between 
the management and the working force. It has 
been said that corporations have no souls; this 
is a pity, if true, for the men in the shop have 
souls, and the coming in to the minds and hearts 
of the men that run the corporations of suf- 
ficient soul to give them a basis for appeal to 
and cooperation with the souls of men at the ma- 
chines may make the difference between profit 
and loss to the corporation. 

Finally, many of us have stopped too soon on 
the path of scientific development of our indus- 
tries. The man is infinitely well worth study 
and infinitely more difficult to study than the 
machine. Does it not come to you with some- 
thing of a shock that we are all careful to have 

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a machine heavy and strong enough for its work, 
but that we rarely think whether a laborer may 
have some heart trouble or some other physical 
weakness that makes him unfit for the heavy lift- 
ing we ask him to do? We all believe in clean 
shops, but do we think enough of the human ele- 
ment to be careful to avoid sweeping when the 
men are about because of the well known fact 
that dust carries all manner of disease germs 
which men breathe? The working out of the ma- 
chine has been a long evolution and the working 
out of the study of men may also be a long evolu- 
tion. It cannot be hastily done. It requires 
patience; so did the machines. Your machines 
are complex; how much more so the man with 
his human mind and heart. But if patience is 
exercised, there is in the man the responsive 
spirit the machine lacks, and that spirit led and 
not driven, guided and not abused, is a power in 
industry of which the wisest of us do not yet 
dream. Without it, we may be able, or we may 
not, to profit temporarily. With it, the age of 
industrial conquest opens. 

There are those I know wishing to ask such 
questions as: "What about the closed shop? 
Do you approve it?" That is not hard to an- 

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THE NEW INDUSTRIAL DAY 

swer. I do not approve the act of any man or 
men who would deny to another the right to work 
at any lawful occupation when, where, and for 
whatever wage, he will. Still less do I approve 
the continuous making of profits where wages or 
working conditions exist that cramp manhood or 
degrade womanhood or stunt childhood. I re- 
call no policy ever avowed by labor that is a 
worse offense than the sweat shop. To accept 
dividends or profits out of human conditions that 
prevent a decent living is quite as bad as, perhaps 
worse than, to demand a closed shop. Let me in- 
sert here two little verses by Berton Braley. 

THE REAL GUIDE 
You may bring to your office and put in a frame 

A motto as fine as its paint, 
But if you 're a crook when you 're playing the game, 

That motto won't make you a saint; 
You can stick up the placards all over the hall, 

But here is the word I announce, 
It isn't the motto that hangs on the wall, 

But the motto you LIVE that counts! 

If the motto says " Smile " and you carry a frown, 

"Do it Now," and you linger and wait, 
If the motto says " Help " — and you trample men down, 

If the motto says " Love " and you hate, 
You won't get away with the mottoes you stall, 

For Truth will come forth with a bounce; 
It isn't the motto that hangs on the wall, 

But the motto you LIVE that counts! 
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"THE NEW INDUSTRIAL DAY" 

But it will be urged that the representatives 
of labor are sometimes unreasonable. I presume 
they are. I have heard labor leaders, whom I 
trust, say so. I have known labor leaders strug- 
gle hard and unselfishly to prevent their own fol- 
lowers from being unreasonable. But the an- 
swer to the charge is easy. Let him that is with- 
out sin among us cast the first stone. If we are 
always sure we are entirely just and wise, there 
may be less unreasonableness found on our path. 

What then does the new industrial day in- 
volve? Profits are no longer the supreme law. 
The regard for the legal rights of the citizen is 
expanding into a recognition of other rights, 
moral, physical and personal. If we are not be- 
coming our brothers' helpers, we are ceasing to 
be our brothers' destroyers. We are thinking 
more carefully how far man may rightly fatten 
on man. The public looks no longer with pa- 
tience on reducing wages to maintain profits or 
dividends. Even to cheapen costs on a falling 
market, it is no longer thought just to pay work- 
men less for the same labor. More and better 
things are expected than a constant struggle be- 
tween profits at the top and penury at the bot- 
tom in the same establishment. 

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THE NEW INDUSTRIAL DAY 

Will the business world recognize the new or- 
der and face it fairly and squarely and meet it 
half way? If so, well for the business world. 
Will the business world simply "stand pat?" 
Then ill for the business world. Attorney-gen- 
erals come and go. Laws are made and changed 
and repealed. They arise from the spirit that is 
abroad in the land. Both are non-essential de- 
tails if the spirit is right. Will the business 
world go on as it has gone heretofore? 
Then the laws and attorney-generals are 
needed. Will the business world accept the 
larger spirit of the new day? Then at- 
torney-generals and laws are harmless. No ill 
threatens any great industry whose spirit is first 
that of equity and liberality to its workers and 
to its consumers and second to its own profit. 
But where profit is first and is to be had at any 
cost of human fatigue, or poverty, or evil condi- 
tions, or at the cost of special privilege extracting 
high prices from the consuming public, then ill 
does threaten that industry. There are slow and 
sure paths to profit and quick and dangerous 
roads that seem also to point that way. We can 
mistake conservatism for conservation and end 
by all falling into the ditch. 

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"THE NEW INDUSTRIAL DAY" 

The new industrial day means not compromise 
but comprehension. Not alone humanity or wel- 
fare work, though these are good, but a larger 
outlook, a spirit of earnest self-criticism looking 
inward, and the spirit of " lend a hand " looking 
outward. It means care for our profit's sake, 
and for our manhood's sake, for the growth of 
the men by whose efforts we prosper. I say 
" growth of the men," not merely increase of the 
wage; for a living wage means more than food 
or clothes. Our industries must stimulate and 
not shackle the growth of all the elements that 
mean uplift and progress for our workmen. This 
is not an appeal to one 's sympathy or sentiment. 
In our use of human forces we must study those 
forces as we study others, learn the facts and 
adapt ourselves to them. 

A great factory should be in a sense like a 
school, for all in it are learning, master and men 
alike, and no limit can be set to the attainments 
of him who hath a teachable spirit. 

We shall not reach the needed results of the 
best methods of industrial management until we 
can speak of our factory towns in a paraphrase 
of Holy Writ, saying : " The cities shall be full 
of happy people working in the mills thereof." 

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1931 



